Amazon Prime is about to get more expensive. CNN Money reports that the cost of Prime membership will increase by 20 percent, from $99 to $119. The change is not immediate. It will come into effect on May 11 and it will affect all renewals from June 16.
"We continue to increase the value of Prime," Amazon CFO Brian Olsavsky said during the announcement of the price hike. Olsavsky added that the company had been experiencing "rises in cost" for providing some of the perks Prime offers like shorter shipping times and access to video streaming.
As CNN Money notes, this is the first time that Amazon has raised the cost of Prime in four years. The last time they did so was in 2014 when the price jumped from $79 to $99. This is the price that Amazon bills Prime customers for their membership annually. The monthly price has already been increased from $10.99 to $12.99.
Jeff Bezos, Amazon's CEO, has claimed that the number of Prime subscribers has risen to 100 million people worldwide. So the new price of the yearly membership renewal will add $2 billion in revenue to the company. To justify this latest price increase, the company says that they have improved the features. CNN reports that Prime offered free two-day shipping to members on 20 million products. But today that number has exploded to 100 million.
The news of the Prime price jump flies in the face of an alleged quote from Jeff Bezos in which he reportedly promises that Amazon would work to always "charge less" instead of more.
According to CNBC, the quote likely stems from a 2001 earnings call and it became public knowledge because of its inclusion in The Everything Store, a book about Amazon by Brad Stone.CNBC speculates that the real reason for the rise in the Prime membership's monthly and yearly renewals has everything to do with more expensive media costs. Amazon Studios is competing with Netflix in the video streaming market and Netflix raised the budget for content to $8 billion. This will have a domino effect of Amazon having to spend more to acquire movies and television shows. Amazon Studios has already invested in large-scale television projects like their upcoming Lord Of The Rings adaptation that allegedly has a $500 million budget.