Amazon (AMZN) today said it would raise prices on its Prime premium subscription service from $79 a year to $99 a year. This is the first time the retailer is raising the price of the service since it launched nine years ago. Student members will pay $49 a year instead of $39.
The company said current members will still receive all the benefits of Amazon Prime, including free two-day shipping for eligible purchases, unlimited streaming with Prime Instant Video and free e-book borrowing from its Kindle library.
The company warned earlier this year that a rise in Prime prices was on the horizon. In a January conference call with analysts about its disappointing fourth-quarter results, Amazon said Prime prices could go up between $20 and $40 a year due to rising fuel costs and other shipping expenses. During the same conference call, the company also reported more than 1 million people signed up for the Prime service in the month of December.
Yahoo Finance Editor in Chief Aaron Task is one of the estimated 25 million Prime members. He says he thinks the $20 will be worth it to his family. “We’re an Amazon Prime family. We have young children and it’s a great way to get our diapers on a regular schedule and whatever shopping we want to do because we can do it at any time," said Task. "I think the extra $20 a year is going to be worth it, but I don’t know if every Amazon Prime member is going to feel the same way.”
Amazon’s results for the holiday quarter came in below Wall Street’s estimates, but news of the possible increase in Prime prices helped ease the blow to the company’s stock price after the initial disappointment. The stock was trading higher on the news early Thursday.