Amazon Prime still a deal?
The jump in annual cost for Amazon Prime membership from $99 a year to $119 raises the question of whether the service is worth it.
During the usual call with financial analysts after Amazon released quarterly earnings on Thursday, chief financial officer Brian Olsavsky dropped a minor bombshell: The price of the company’s wildly popular Prime membership will increase by 20 percent.
The annual cost for Prime will jump from $99 a year to $119 on June 16 for existing customers, and new members will pay the higher price starting May 11. It’s the first increase for the annual fee since 2014, though the monthly cost of Prime was raised in January from $10.99 to $12.99.
Olsavsky justified the hike by saying the cost to deliver packages via Prime has increased, and the 2014 version of the program is very different from the 2018 one. There were 20 million products eligible for free Prime shipping four years ago; today, there are more than 100 million. And, of course, there are all the TV shows and movies Amazon has for its 100 million Prime users, as well as streamable music and shareable books.
It should also be pointed out that Amazon more than doubled its profit in the most recent quarter, so it’s not hurting for cash. And it spent some of that coin to renew its contract to
stream NFL games on Thursday, a deal that likely didn’t come cheap.
While not a bank-breaker for most people, a $20 hike is still a $20 hike. Amazon obviously thinks most people will see the value in Prime and swallow this slightly bitter pill. But it begs the question: How much is too much when it comes to Prime?
I asked my Twitter followers if they thought that a $119-a-year Prime membership was still worth it. Most said it was. (See HoustonChronicle.com/primepoll.)
But at what point does Prime become less of a good deal? That depends on how you use it.
My wife and I are frequent Amazon shoppers — we estimate that we order between five and 10 things each month and almost always opt for the free twoday-shipping option available to Prime users.
We watch several Amazon series — we loved “The Marvelous Mrs. Maisel” and “Trapped,” and we are eagerly looking forward to the latest seasons of “Bosch,” “The Man in the High Castle” and “Patriot.”
On shipping alone, the cost of Prime likely pays for itself in about a quarter for us — at least, at the $99 price point.
Adding another $20 probably adds at least another month to six weeks before the cost is recovered.
But one of my Houston Chronicle colleagues is not so sure. He only occasionally buys things from Amazon and got his Prime membership so his father could watch its TV shows.
At $119, he’s thinking of dropping it, but he knows his father would be disappointed. What price point would make me want to walk away from Prime? $149? $179? $199?
I start to wince when I think about paying $150 for it. Any more than that, and if the math turned upside down on free shipping, I might be gone. But, of course, I say this without consulting with my lovely wife, who easily buys twice as much stuff from Amazon.
It will likely be some time before I have to think about this again. For now, Prime still fits the way we live our consumer lives. But Amazon does need to careful that it doesn’t kill off the goose that delivered its golden egg, free with two-day shipping.