Amazon is increasing the price of Prime for most members

  • Amazon said on an earnings call it will increase the price of annual Prime memberships to $US119 a year from $US99.
  • CEO Jeff Bezos recently disclosed that Amazon had more than 100 million paid Prime members globally.
  • Amazon says it will continue to offer Prime discounts for students and some people with lower incomes.

Amazon says it will increase the price of its annual Amazon Prime membership program by $US20, to $US119 a year, for US customers.

The company’s CFO, Brian Olsavsky, disclosed the price increase on an earnings call discussing the company’s latest financial results, saying it would take effect May 11 for new members and affect Prime membership renewals after June 16.

“We still feel it’s the best deal in retail,” Olsavsky told an analyst on the call.

Olsavsky pointed to the benefits of Prime – including tens of millions of additional items eligible for Prime shipping – and the increased costs of fulfilling them for customers as justification for the price hike.

Amazon increased the price of its monthly Prime membership in January to $US12.99 from $US10.99. Consumer Intelligence Research Partners estimated last year that only about 19% of Prime members paid the monthly rate.

In his latest letter to shareholders, Amazon CEO Jeff Bezos disclosed for the first time how many Prime members Amazon has, saying it has more than 100 million paid subscribers globally. Analysts had estimated as recently as last year that the figure was about 90 million.

Bezos described Prime’s expansion in the past 13 years. The membership now includes one-day and same-day shipping as well as the standard two-day shipping. Those benefits added up to a lot of packages – 5 billion items were shipped with Prime last year.

Not everyone pays the full price for Prime. Since June, Amazon has offered discounts on monthly Prime memberships for holders of electronic benefit transfer cards, the primary way that people in the Supplemental Nutrition Assistance Program, commonly known as food stamps, get their benefits. Amazon also lowers the price of Prime for Medicaid recipients and students.

The discount is substantial, lowering the membership cost to about $US6 a month.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.