Amazon boosts Prime membership to $99, cites fuel and transportation costs

amazonprimeAmazon is boosting the price of its Prime membership program, increasing it from $79 per year to $99 per year. The move was expected, although Amazon had said it was considering raising the price to as much as $119/year, so the increase is at the low end of the range that the company had signaled.

Existing Amazon Prime members will pay the $99/year rate the next time they renew, if their renewal date is on or after April 17.

Here’s a portion of the note that Amazon.com sent to Prime members.

Even as fuel and transportation costs have increased, the price of Prime has remained the same for nine years. Since 2005, the number of items eligible for unlimited free Two-Day Shipping has grown from one million to over 20 million. We also added unlimited access to over 40,000 movies and TV episodes with Prime Instant Video and a selection of over 500,000 books to borrow from the Kindle Owners’ Lending Library.

The price of Amazon Student, a version of Prime for college students, will now be $49/year after a standard six-month free trial, vs. $39/year previously

The change comes as Amazon.com faces a class action lawsuit alleging that it encourages third-party sellers to inflate prices to help cover the cost of shipping on Prime-eligible products.

Amazon Prime members receive free two-day shipping on selected products, as well as other benefits such as access to Prime Instant Video, and the ability to borrow from a selected library of e-books on Kindle devices.

Shares of Amazon.com are up more than 2 percent on the news.

What’s unclear is how many of Amazon’s Prime members will accept the new pricing arrangement, with some speculating that the company could see as much as a 15 percent drop off rate after three to six months.

  • Guest

    I use Prime for shipping, but I never use the video service. I’d prefer they unbundle them and just let me pay for the part I actually use.

  • http://www.intrinsicstrategy.com/ FrankCatalano

    Not a surprise, as I doubt Amazon wanted to cross that psychological $100 price point barrier. This was as high as they could push it. This year.

  • http://cobaltpm.com/ Ben Ferris

    I agree – I never watch the video service and would prefer to pay less to get rid of it. I might actually watch it if they supported Android but it seems they are trying to get everyone to buy a Kindle.