B12 Solipsism

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Amazon Prime Price Increase

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Amazon Prime and The Pope
Amazon Prime and The Pope

From an email sent early this morning, Amazon is raising the Prime fee to $100, an increase of around 25%.

We are writing to provide you advance notice that the price of your Prime membership will be increasing in 2015. Your 2014 annual renewal will remain at the original price of $79. On October 5, 2015, your membership will renew at $99/year.

Even as fuel and transportation costs have increased, the price of Prime has remained the same for nine years. Since 2005, the number of items eligible for unlimited free Two-Day Shipping has grown from one million to over 20 million. We also added unlimited access to over 40,000 movies and TV episodes with Prime Instant Video and a selection of over 500,000 books to borrow from the Kindle Owners’ Lending Library.

via Amazon.com: Amazon Prime (One Year Membership)

In general, I’ve been happy with the Amazon Prime shipping deal – though it does obviously have benefits for Amazon.com as well. I purchase lots of office supplies, tools, and what-not from Amazon that I used to get elsewhere simply because it’s more “frictionless” to just click through to Amazon. That said, I’m not sure that $8.33 a month is the deal it used to be. Amazon needs to add more perks to the Prime membership to keep it compelling. I don’t use the video streaming, ever, why should I pay extra for it?

I guess I’m not alone in demanding more in exchange for this price hike:

While the moves are generally seen as a revenue booster with minimal cost effects, some have warned that the Prime increases could carry negative impacts.

UBS, citing a survey, last month said Prime customers wouldn’t be so eager to renew if the price increased. Amazon would have to provide even more value and better service to accompany a price hike, which wouldn’t help margins improve, UBS said then.

Amazon—known for robust sales, thin profit margins and big spending—posted a large revenue increase for the fourth quarter, but its profit and outlook fell below expectations.

The company has been pursuing potential deals under which it would post product listings with links to certain traditionally brick-and-mortar retailers’ websites, The Wall Street Journal reported last month.

(click here to continue reading Amazon Raises Prime Subscription Price To $99 A Year – WSJ.com.)

because there is a point at which free second day shipping is not worth the pre-paid cash, especially when the second day guarantee is more of an aspiration rather than an absolute… 

“CIRP also checked the renewal intent at the proposed $99 and $119 prices, and found dramatically different results,” said Mike Levin, Partner and Co-Founder of CIRP. “At $99, under half of subjects think will either definitely or probably renew. And at $119, 40% of subjects say they will definitely not renew their membership.”

Those numbers tally pretty closely with a poll the WSJ’s Digits blog ran on January 31, in the wake of Amazon raising the possibility of a price hike in its conference call. In that poll, 47% of the 2,889 respondents said they were not willing to pay any more for the service

(click here to continue reading People Love Amazon Prime. But Will They Pay More For It? – Corporate Intelligence – WSJ.)

Written by Seth Anderson

March 13th, 2014 at 8:52 am

Posted in Business

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