Amazon Plots Possible Prime Price Hike

By Steve Anderson January 31, 2014

It wasn't so long ago—late October, actually—that Amazon made the unexpected move of bumping up the price required to get free shipping on an order from $25 to $35, a move which some wondered may have been staged to get more people interested in Amazon Prime. But then, almost contrary to that, new reports emerged that suggested Amazon Prime may be getting a bit pricier in the weeks to come with a potential new price hike.

While there's nothing confirmed on this as of yet, the possibility was broached during the fourth quarter earnings call with analysts, in which Tom Szkutak, Amazon's chief financial officer, noted that it was getting, not surprisingly, more expensive to ship goods as opposed to less, and this may in turn require a bit of a boost to rates. Just how much of a boost was unclear, but the numbers mentioned ran between $20 and $40 for the year, meaning that it was likely that Amazon Prime membership could clear $100 for the year.

Of course, Amazon Prime has been bolstering its offerings as well in recent memory, with free book borrowing on certain Kindle titles, the growing library of streaming movies and TV shows, and of course the free shipping on over 19 million different items. There were questions asked if Amazon might be breaking the services down—allowing access to only the video, for example, for less—but that question wasn't immediately answered.

Granted, it does make sense here. Fuel prices haven't exactly been on a decline, and with the impact of the new Affordable Care Act likely throwing its own spin on the situation, Amazon needs to get fresh income coming in. Amazon likely can't continue to log losses forever before the investors get fed up, and Amazon losses were noted just over a month ago. While this particular price hike may not get users to flee in droves—even at the highest price we're still talking about $119 a year, which breaks down into just shy of $10 a month—it's not the strategy that's going to get people coming into the service. With word of a new game console in the works, Amazon needs more people on Prime, not fewer, so that the widest possible market is available to play on that console, especially if the console uses Prime at all for delivery of the media involved. What's more, given how much business Amazon did over the holiday shopping season, would price hikes really be a help? The company did excellent business; why discourage future shoppers?

A price hike here—much like the price hike on minimum free shipping order size back in October—was likely pretty much inevitable. Prime is still a pretty good deal, especially for those who do a lot of shopping on the Amazon service. The same shipping prices that make it necessary for Amazon to consider a price hike aren't any less to regular people, so a savings on that front will likely still be welcome, even if it's a reduced savings over the previous. Only time will tell just how far Amazon goes with this as well as any fallout from the move. Any hike is likely to cost the company business, but will the savings be sufficient to make up the loss?

Edited by Cassandra Tucker

Contributing TechZone360 Writer

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