Increased shipping costs are forcing Amazon to consider boosting the price of its Amazon Prime subscription service by $20-to-$40 a year from the current $79 per year charge, the company told analysts on a conference call this afternoon.
The news followed Amazon’s quarterly earnings report, in which the company missed Wall Street’s earnings expectations
The company cautioned that the Amazon Prime price hike hasn’t been finalized. Tom Szkutak, Amazon’s chief financial officer, noted that Amazon hasn’t raised the subscription rate since the service launched in 2005.
“Customers certainly love Prime,” he said. “The available units for shipment have grown dramatically from 1 million to over 19 million in the last nine years. Customer usage on a per customer basis has gone up pretty dramatically given the selection, and the convenience of the service. Shipping costs have gone up a lot, fuel costs have gone up a lot, so that’s certainly the basis for us to look at it.”
The Amazon Prime service offers free two-day shipping on eligible products, in addition to Prime Instant Video movie streaming and Kindle book loans. Amazon announced after the holidays that the number of Amazon Prime subscribers had reached “tens of millions” of people.
