I am a huge fan of Amazon Prime and use it a lot. From buying Christmas presents to daily household needs, we use the Amazon Prime service and feel it’s worth it’s membership cost. At $79 dollars a year it is a great value. Not only do you get great deals on products, but you also get free 2nd day air. Also included is Amazon’s Instant Video which is similar to Netflix in that they have 40,000 current and timeless movies as well as popular TV Series for free. Netflix for example is 8 bucks a month. So there is that added perk along with their Cloud services. But Amazon has decided to raise it’s Prime membership to it’s 23 million members by $20.00. That’s a sharp increase from the $79 it was. Amazon is citing things like fuel and transportation costs which I understand and agree with. Amazon states that they have not had an increase in it’s Prime Membership fee for over 9 years. Well Amazon, who’s fault is that? Normally companies move prices by 3%-5% yearly in many business segments I work in. It is palatable and the customer can absorb that without too much difficulty. But a 20% increase is irresponsible and shows mismanagement on Amazon’s part and their continuing struggle to be a profitable company. Even though they have had stellar growth in sales over the years the timeless saying remains true for even Amazon, “are you making sales or are you making money?”
Amazon will now push this massive price increase through on September 15th 2014. Anyone needing to renew their Prime account before then will still pay the same amount. After that tack on another $20.00. I still think that Amazon Prime is a good value at $99.00 but I disagree with price increase that sharp in a rebounding economy like ours and the perception it creates on Amazon’s fiscal stability.
On the flip side of taking another $20 bucks from 23 million members (460 million additional to the bottom line ) investors are happy with the move and Amazon stock rose to $10.05 a share or 2.7% increase. It is still down for the year 7% for the year.