Price of Amazon Prime May Jump To $119 a Year 298
colinneagle writes "Amazon CFO Tom Szkutak hinted during the company's earnings conference call [Thursday] that we might see an increase to the company's popular Amazon Prime service. As it stands now, Amazon Prime costs $79 per year and offers users free shipping on millions of items, free book borrowing for select Kindle titles, and last but not least, free streaming to the company's video on-demand service. Going forward, Amazon may increase that pricepoint to either $99 or $119. That's a rather significant price increase, but it's important to keep in mind that the price of Amazon Prime has remained the same ever since Amazon first started the program nine years ago." How many products do you use that haven't increased in price for that long?
"Sumsing vwrong here!" (Score:4, Interesting)
"Sumsing vwrong here!"
http://www.wired.com/business/2013/03/amazon-prime-could-soon-cost-next-to-nothing/
Re:It doesn't offer free shipping (Score:5, Interesting)
Personally I love prime, but at $129 I would actually count my purchases
Prime makes financial sense if you make on average more than 2 orders a month items that would be covered by prime that would not be eligible for free shipping, at $5 shipping.
The streaming videos and free upgrade to 2 day shipping on prime eligible items: add additional value.
I suppose what would be interesting is if they started offering a "Prime Lite" for $60 a year --- with no streaming videos, no 2 day shipping, but free standard shipping on all normally prime-eligible items fulfilled by Amazon.
Re:how many products? (Score:4, Interesting)
Depends on where you live and what your costs are. Real-estate prices are down in some places and up in others. Oil prices are up considerably from the '90s, though roughly flat for the past few years. Natural-gas prices are up in Europe, but way down in the U.S. due to the shale-gas boom. Food prices are relatively stable overall, though specific food items have gone up or down. Amortized cost of car ownership has gone down, due to a mixture of cheaper initial-sales prices and longer average lifespans. Amortized cost of ownership of a family computer suitable for basic email/web has gone way down, due to advances in technology. Airfare has gone down in Europe (due to competition from low-cost airlines), but up in the U.S. and internationally (due to increased oil prices, plus maybe related to airline consolidation). Etc., etc.
So, if you live in Pittsburgh, use a lot of natural-gas for heating, drive a basic car relatively short distances, and have a home computer, your overall cost of living has probably declined over the past 20 years. On the other hand, if you live in Boston, take frequent roadtrips or plane trips, and heat you apartment with fuel oil, your cost of living has probably increased over the past 20 years.
Of all these, rent/housing costs are typically the dominating factor in most CoL equations.
Re:how many products? (Score:5, Interesting)
Generally speaking, we are in deflation, not inflation. So as the commenter correctly points out, a lot of things are decreasing in price.
Here's the problem: our wages are also decreasing.
Here's another problem: a lot of things -- especially thing which we are *legally required* to buy from one source-- are increasing in price. So housing, electricity, union leadership, health insurance, the cost of government, public schools, taxes, bailouts... all are crashing through the roof.
Basically, if the purveyor thinks he has a captive market, he's grabbing everything he can.
But, that being the case, the appropriate question is not as the original headline, "how many things haven't increased in price in that long", it is instead, "how many things, when they increased in price 25- to 50-%, did you have the option to not buy, and still continued to buy?"
Typically speaking, when something went up in price 25- or 50- percent, I stopped buying it. That is, my purchases went to something like 5% of what they had been before. Often, I stopped buying it completely, because I had the incentive to find better alternatives. Once I had the better alternatives, I was done.
Here's a better question: in today's era of retail cannibalization, how will Amazon's market share hold up if they increase prices?
Brilliant strategy: Pay more for less (Score:5, Interesting)
I find it interesting that this comes just as Amazon has fallen in love with hybrid shipping services such as UPS Mail Innovations and FedEx SmartPost for Prime delivery. These services utilize UPS or FedEx only to the destination city where your package is then handed off to the USPS for delivery. As a result, Prime "guaranteed" 2-day delivery has become "often 2-day" or "occasional 2-day" ...and now, they feel like this is worth more? Wow.
Oh, they still haven't dropped the magic word "guaranteed". Their offering to satisfy the guarantee is an additional month of inconsistent, slower than stated service.
What hasn't gone up in price for that long? (Score:4, Interesting)
Costco hot dog and soda at the snack bar. Been $1.50 for nigh on 20 years.
Re:how many products? (Score:5, Interesting)
The thing is, 99% of the time, I don't care about getting things quickly, but I joined Prime last summer because I needed to buy a bunch of things for a trip to Europe, and I wanted to make sure stuff arrived in time. I initially planned to cancel it after a year, but I've tried the Prime Instant Video, and now I'm debating.
Either way, if it goes over the price of Netflix ($96 annually), I can't imagine choosing to stay with Prime over Netflix. The two-day shipping benefit is only significant if you would ordinarily have paid for two-day shipping. Otherwise, it's just not a very enticing perk unless you know you're going to need to buy a lot of gear in a short period of time. And that doesn't lead to continuous customer revenue. It leads to people buying it for just long enough to get the job done, then dropping it, which raises the cost for Amazon, which means they'll raise the price, and then even fewer people will buy it when it isn't absolutely necessary.
What really matters is the streaming service. And in that regard, Amazon's offering doesn't compare too favorably. Netflix has more content, and fewer encoding problems. There was one episode of Buffy where the video was jerky on every device I own, and I've watched a few TV shows where Amazon incorrectly encoded 16:9 content as letterboxed 4:3 content, so I get four black bars on my TV. That was excusable ten years ago. Now, it's just negligent.
And the Netflix iOS app actually works over cellular connections, unlike Prime, which deliberately refuses to work. That means if I were using Netflix, I could watch stuff on my phone while away from home as part of my unlimited data package. With Amazon, I have use my laptop, where I have a tethering data limit of about three hours of video.
So I've been debating whether to continue Prime even at $79 or jump to Netflix for only a few dollars more. Raise the price to $119, and they'll make my decision a lot easier.
Re:how many products? (Score:5, Interesting)
Yeah, right now at $79 I just keep letting my Prime membership auto-renew because a) I'm lazy, and b) it does save me a little at Christmastime. But their video catalog is pretty limited - much of what I've tried to watch is TV shows where, it turns out, they've only included a few episodes you can access without paying more. And their Kindle Lending Library is likewise pretty limited - it's "all the Harry Potter books plus hundreds of authors you'll never want to read".
Really, even at $79 it's hard to justify. There's not a whole lot I *must* get in two days...
I'll probably just not renew this time around - free ground shipping is good enough. And, if they further limit that, I'll probably start frequenting other online stores. Pretty much everyone is on the web now; I just currently default to Amazon because of the "free" shipping.