ad news for Amazon Prime members: the company’s monthly subscription price is getting a small price bump of $2.
Amazon announced on Friday that its month-to-month Prime subscription is going to increase from $10.99 to $12.99 in the U.S. That’s only about an 18 percent increase, but it works out to be about $24 more a year than the old price ($156 versus $132).
Presumably, the price bump is a way to incentivize current monthly subscribers to opt for the company’s yearly $99 Prime membership. Indeed, the $99-a-year price isn’t changing — and it’ll now save members about $57 over the month-to-month price.
The bump comes about two years after Amazon first introduced its monthly payment option for Prime. Originally, it was seen as a way to attract customers who wouldn’t — or couldn’t — pay the $99 yearly fee all at once. And when Amazon debuted it, Prime membership among lower-income households grew significantly, Recode reported.
The monthly price of Amazon Prime for students is also getting a bump, from $5.49 to $6.49. The monthly Prime membership for subscribers on government assistance, however, will not see a price increase.
Amazon Prime is a critical piece of the company’s overall business. Prime members tend to purchase items from Amazon much more frequently, and they also tend to spend more money on items than non-Prime customers. Hence, the month-to-month option was obviously a way to lure new customers in.
As for why the company is raising its monthly subscription fee, it’s worth venturing that the $10.99 price just wasn’t sustainable for the company.
In an emailed statement (via CNBC), the company said that it’s growing the number of items eligible for two-day free shipping, and is also expanding free same-day and one-day delivery to more cities and towns than ever. The company is also placing increasing focus on original content and other benefits of Prime membership, like music and reading.
In other words, Amazon is continually adding to and improving the perks of Prime membership. And all of those extra benefits are expensive.
The price increase kicks in immediately for new subscribers. Current monthly Prime members will see the price bump in their first payment after Feb. 18.