Amazon

Amazon Raises Monthly Prime Membership Fees By 18 Percent

Two years after Amazon launched monthly Prime memberships, the eCommerce retailer is increasing its monthly membership fees by nearly 20 percent, Recode reported.

The monthly fee for Amazon Prime will jump from $10.99 to $12.99 in the U.S., which works out to an increase of 18 percent. On an annual basis, monthly memberships will now cost consumers $156 a year. The company will also raise the monthly fee for its Prime program for students, which it started last fall, from $5.49 to $6.

Despite the price increases for monthly Prime memberships, the cost of an annual membership will stay at $99 and monthly Prime Video membership will remain at $8.99. Amazon will keep the monthly Prime membership for consumers on government assistance at $5.99.

The price increases come as Morgan Stanley sees signs that Amazon Prime’s growth is starting to slow. According to news from CNBC, Morgan Stanley noted in a December 2017 research report that 40 percent of American consumers already have Prime memberships, which matches the same level seen in the fourth quarter.

According to the Wall Street firm, if Prime membership is starting to plateau, it means it’s important that Amazon expands Prime to lower income households and those with older consumers residing in them. Those two segments of the market have historically been a small percentage of Amazon’s vast population of Prime users.

Overall, a study has found that Amazon Prime subscribers are valuable to the eCommerce retailer: They currently make an average of $1,300 in purchases per year — and they continue to grow their spending.

According to Fortune, the Consumer Intelligence Research Partners (CIRP) estimates Amazon currently has 90 million U.S.-based Amazon Prime subscribers. In fact, 63 percent of the eCommerce retail giant’s customers are Prime members and, in the past 12 months, the total subscriber base has grown by 38 percent.

The study, which includes data from 500 Amazon customers, estimates Amazon Prime subscribers spend almost double the $700 per year the average non-member spends on the site.

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