Reuters
Amazon.com Inc. announced Thursday that it will increase the price of a Prime subscription for U.S. consumers, a week after disclosing that more than 100 million people were members of the retailer’s program.
Amazon Chief Financial Officer Brian Olsavsky revealed the change in a conference call following the release of Amazon’s first-quarter earnings. Amazon reported huge increases in profit and sales that sent shares toward record highs in late trading Thursday afternoon.
“The value of Prime to customers has never been greater. And the cost is also high, as we pointed out especially with shipping options and digital benefits, we continue to see rises in costs,” Olsavsky said in response to the first question from an analyst, which had nothing to do with Prime. “So effective May 11, we’re going to increase the price of our U.S. annual plan from $99 to $119 for new members.”
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Olsavsky added that current members of Prime who renew after June 16 will also have to pay the new price, which is an increase of 20%. He noted that Amazon has not increased the price since March 2014.
Since Amazon last increased the price, it has spent billions of dollars acquiring content for its Prime streaming-video subscription service, as well as building out its delivery infrastructure with fulfillment centers worldwide. The National Football League announced earlier Thursday that it had agreed to extend a contract with Amazon for streaming rights to Thursday Night Football for two years.
Beyond access to the Prime streaming service, Amazon Prime memberships provide free two-day shipping on many items as well as access to other perks.
Chief Executive Jeff Bezos wrote in his annual letter to shareholders last week that Amazon Prime had surpassed 100 million members, the first time Amazon had disclosed the total membership for the program. An additional $20 a month from all of those subscribers would mean an extra $2 billion for Amazon, though he did not break down how many of those were U.S. customers, and Olsavsky did not disclose any plans to increase costs for international Prime subscribers.
“We always evaluate the price of Prime in all the countries we’re in, and we’re looking for creative ways to reach the customer,” Olsavsky said later in the conference call.