Breaking News Bar
updated: 3/13/2014 10:09 AM

Amazon hikes Prime membership to $99 per year

hello
Success - Article sent! close
  • An Amazon.com package awaits delivery from UPS in Palo Alto, Calif. Amazon is raising the price of its popular Prime membership to $99 per year, an increase of $20.

      An Amazon.com package awaits delivery from UPS in Palo Alto, Calif. Amazon is raising the price of its popular Prime membership to $99 per year, an increase of $20.
    Associated Press

 
Associated Press

Amazon is raising the price of its popular Prime membership to $99 per year, an increase of $20.

It's the first price increase since the online retailer introduced its Prime membership program, which includes two-day free shipping on many products, in 2005. The company said it would probably raise the price by $20 to $40 in January.

Order Reprint Print Article
 
Interested in reusing this article?
Custom reprints are a powerful and strategic way to share your article with customers, employees and prospects.
The YGS Group provides digital and printed reprint services for Daily Herald. Complete the form to the right and a reprint consultant will contact you to discuss how you can reuse this article.
Need more information about reprints? Visit our Reprints Section for more details.

Contact information ( * required )

Success - request sent close

The hike will apply to users when they renew their membership. Users who renew membership before April 17 will pay $79 for the year. After April 17 the price will change to $99. New customers that start a free trial between now and March 20 will lock in the $79 rate for the first year.

Amazon has spent heavily to grow its business and expand into new areas, from movie streaming to e-readers and groceries, and it has accomplished that goal.

The company said it added a million new Prime members in the week before Christmas and a surge in online ordering in the U.S. contributed to huge delays for people sending gifts just ahead of the holiday.

But that has rankled some investors, who are looking for bigger returns.

In an email Thursday to members, the Seattle company stressed that it has not raised the price on Prime in the nine years since its launch, even though shipping costs have increased and it has added new services, such as video streaming. The number of products available for two-day shipping has grown to 20 million from 1 million.

Amazon doesn't disclose how many Prime members it has, but it said in December that it has "tens of millions" of members worldwide.

Cowen & Co. analyst John Blackledge estimates there are about 23 million U.S. prime members. Blackledge said that since the bulk of new memberships occur in the fourth quarter, around the holidays, the benefit of the price hike will probably be felt next year.

He added that he doesn't expect the continued growth of Prime members to slow down despite the price increase.

The announcement was an immediate hit with investors.

Shares rose $10.05, or 2.7 percent, to $380.69 during morning trading. The stock is down 7 percent since the beginning of the year.

Share this page
Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.