We knew it was probably coming, and it is finally here. Amazon.com, Inc. (NASDAQ:AMZN) has emailed the official notification that it is raising the price of its annual Prime service by $20 to $99. Of course a higher price means—theoretically, anyway—more revenue for Amazon, but will users think it’s still worth it with the higher price?
Amazon reminds us of how long it’s been
In the email, Amazon.com, Inc. (NASDAQ:AMZN) reminds us that the price of the service has remained the same for the last nine years, which actually is a good length of time in terms of price increases. The online retailer also notes that the price has remained the same in spite of higher transportation and fuel costs. Of course Amazon also reminds users that it has grown the number of videos and books available for borrowing users have access to through the Prime service.
Students receive a lower rate for Amazon.com, Inc. (NASDAQ:AMZN)’s Prime service, but that price is going up too. The company raised it by $10 to $49 a year. The increased price takes effect with the next renewal, assuming users do not cancel, of course. Also the new price takes effect on April 17, which means that users whose renewal date is before then will be able to renew at the previous price.
It’s also worth noting that Amazon.com, Inc. (NASDAQ:AMZN) didn’t raise the price as much as it said it could. The company’s chief financial officer said earlier this year that they could boost the price by as much as $40.
Amazon shares rise
Shares of Amazon.com, Inc. (NASDAQ:AMZN) are now at their highest level since they came crashing down after the online retailer posted disappointing holiday quarter results. Investors are undoubtedly reacting to improvement the company should see in margins thanks to the higher price.
Of course Amazon.com, Inc. (NASDAQ:AMZN) users will have differing opinions about the price hike. Those who order from the service frequently will certainly find it to be worth the extra money just to save on shipping. And of course those who frequently utilize the on-demand videos and / or the Kindle lending library will also find value, even in the higher price. After all, the price is just $3 higher than Netflix, Inc. (NASDAQ:NFLX)’s annual price—of $8 a month—and getting free shipping on products enhances the value even further.
