Amazon is making it harder and harder to quit Prime

  • Amazon keeps adding more perks to its Prime membership.
  • It announced in May that substantial discounts for Prime members would roll out in Whole Foods stores this summer.
  • The total value of Prime benefits has been pegged at $US785 a year in value, according to JP Morgan analysts.
  • Taking that into consideration, even the recently raised price of $US119 a year might seem like a great deal.

Prime is Amazon’s crown jewel.

The membership is one of the most important parts of the company’s offerings, and Amazon takes great care to keep it competitive.

Prime customers are Amazon’s most frequent and valuable customers. CEO Jeff Bezos recently revealed that there were now more than 100 million people around the world paying for the service.

Prime members got some bad news when Amazon announced in April that it would raise the annual price of membership by $US20 a year, to $US119 from $US99. Amazon had previously announced it would increase the price of monthly Prime memberships, to $US12.99 from $US10.99.

There has been some speculation that the higher price of Prime might make some reconsider paying for another year of membership, but most experts don’t think a drop in subscriptions would actually happen based on how many people have reported having positive experiences with the service.

Amazon keeps adding perks to Prime

While many might associate Prime solely with its two-day-shipping guarantee, it also has other benefits like video and music streaming, and there are some items that are available only to Prime members, which creates additional value.

In May, Prime members were given another perk: big discounts at Whole Foods, to be rolled out at stores this summer. Amazon keeps adding perks just when customers might quit over rising prices.

Access to the many deals of Amazon’s annual Prime Day is another perk of being a Prime member. Those deals begin at 3 p.m. ET on Monday, July 16.

The value of Prime has risen steadily as Amazon has added more benefits to the program over the years. A recent JP Morgan analysis estimated that the service is actually worth $US785 a year when everything it offers is counted together. That’s six and a half times the actual cost of an annual Prime subscription, even with the price increase. It’s also an increase of about 12% from what JP Morgan estimated Prime to be worth last year, when its analysts said membership was worth $US700 a year.

“Prime delivers such massive scale and features that we believe it would be very difficult for any company to replicate and compete against, and Amazon continues to expand and add more value to Prime by adding new benefits and growing existing offerings,” the analysts wrote.

That means that even if a customer does not take advantage of everything Prime membership has to offer, there’s still the perception that they’re getting a good value for their money.

“People are sensitive to losses, and price increases count as losses psychologically,” Ryan Hamilton, a professor of marketing at Emory University, told The Washington Post. “The broader perspective, though, is that people tend to be willing to pay for what they perceive as value.”

As Amazon adds services, it wants to make sure that when customers take a second look at whether they’re really getting value for their money after the price increase, they’re satisfied with their membership and will renew another year.

New products and services are one way Amazon does this, but it must take care that its current service standards don’t slip in the meantime. Business Insider has spoken with and heard from many customers who claimed that Prime shipping standards have slipped. That may all be a misunderstanding, though.

Check out all of our Amazon Prime Day coverage:

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