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Amazon Prime Considers Rate Hike: 86% of Slickdealers Say No Way

papasteves02 1,309 February 6, 2014 at 01:47 PM More Amazon Deals
Earlier this week, Amazon briefly mentioned [cnbc.com] it was considering a price increase for its Amazon Prime subscription service. Industry analysts immediately began speculating how the rate increase would impact Amazon Prime subscriptions and Amazon sales. Would Prime subscribers cancel? Or pay up? Instead of speculating we took to the Web and asked our community if they would pay more for Amazon Prime, and the result was overwhelmingly no.

Amazon Prime offers subscribers free 2-day shipping, discounted overnight shipping, Amazon Instant Video streaming, and Kindle lending library privileges. And Prime’s been priced at just $79 a year for nearly a decade. The rate hike the retail giant is considering: $20 to$40 a year.

We posed the following question to our community via the Slickdeals website and our Facebook page [facebook.com]: Would you pay more $20 or $40 more for Amazon Prime? As of today, 86% of respondents said they would not pay $20 to $40 more for Amazon Prime.


$20 Yes, $40 No

Not reflected in the numbers above are the handful of respondents that said they would pay $20 more for Prime but $40 more was too much, posting remarks similar to that of Slickdeals member UnitCS: “20 extra for sure...40 no”. Amazon’s brief mention of a price increase far in advance of it happening may be designed to mitigate a backlash similar to the one Netflix experienced [forbes.com] when it first announced its price changes in 2011. When Amazon finally does increase its price, doing so by $20 would be less impactful to the consumer when framed against the larger $40 price increase.

Tiered Pricing
Many respondents also suggested that Amazon move to a tiered pricing structure. Slickdeals member Core2Quad suggested a “Prime Lite”, where customers would be charged “$39.99 a year” with “no movies or e-books”. Amazon mentioned that it is considering a price increase because its incurring more charges on shipping as the program scales. Rather than passing on those costs to the customer, Slickdeals member slowmoz suggests that Amazon “unbundle the movies and books."

Maybe...If Customers Get More Value
Other respondents decided to take a wait and watch approach to see if Amazon would introduce new features or content to its Amazon Prime service (drones [amazon.com] anyone?).

Facebook user Catherine Pfent commented that “If Amazon had all the shows and movies from Hulu and Netflix, and the 2-day shipping, then we would definitely pay for an increase.” Greg Higgins aptly pointed out on Facebook that a Netflix streaming subscription on an annual basis is $96, so if Amazon can match Netflix’s content library in size and quality, it wouldn’t be a stretch to pay close to $100 for Amazon Prime.

Facebook user Aayman Frazand would only consider paying more for Prime if Amazon moved to one-day standard shipping as opposed to the current two-day standard shipping.

Will Amazon Do It?
In raising the price of Prime, Amazon would be making a bet that long-term revenues from a more expensive Amazon Prime service would offset any short-term losses from the subscribers that cancel. If they proceed with a $20 increase, they could afford to lose 25% of its current subscriber base and still break even (not accounting for the loss or gain on product purchases that are associated with Prime membership or the effect a price increase would have on its stock price). If they increase the price by $40, they could afford to lose half its current subscriber base and still break even in the short run.

While the mention of a price increase on its earnings call was brief, it was certainly a carefully thought-out maneuver on Amazon's part. It is unlikely that Amazon would mention it if there wasn't some sort of price structure change in the works for Amazon Prime.

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50 Comments

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#2
Wish I could just do prime without the movies. Have watched one movie in the past 5 years, but use Prime shipping at least once a week (many times 5x a week) Wonder if they could charge less for that.
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#3
I'd also like to mention that starting I believe February 18, amazon will be increasing SELLERS FBA fees, which should translate to a small increase for most products. Refer to Amazon directly for the full info: http://www.amazon.com/gp/help/cus...=201411290
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#4
I was a Prime member for 4 years, maybe 5. 2013 was the WORST year. I would say that 1/3 of my shipments did not arrive in 2 days. Initially, I thought it was USPS / UPS / FedEx that was the issue. But then I noticed that the item would ship a day later than it should have, or the method was not two day. I complained to Amazon several times, and warned them I would not re-subscribe, and that was prior to Christmas. Christmas came and it was the same issue, I have now allowed my Prime to expire. Very sad.

Now I just fill my cart and when I have over $35, I order. I do not miss the lame - older selection of Amazon Prime movies.

Now that Amazon charges Tax and Prime is not as much of a benefit to me - I am more free to use other sites and don't feel as though I should game Amazon Prime to get my products. 2 day shipping that is NOT 2 day shipping is not a benefit worth paying for.

Does that make sense?

Thanks - B.A'
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#5
The day that amazon starts to charge for tax in my state is the day I cancel my prime account. There's no more advantage anymore for me, after that. I can just price match amazon at my local store and get it same day.
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#6
"Greg Higgins aptly pointed out on Facebook that a Netflix streaming subscription on an annual basis is $96, so if Amazon can match Netflix’s content library in size and quality, it wouldn’t be a stretch to pay close to $100 for Amazon Prime."

This confuses me. Why should Amazon have to match Netflix's library to make it worth the "stretch" to $100? Do these same people think Netflix should include a membership similiar to ShopRunner to make it worth the stretch? Not to mention the additional discounts Prime members receive on certain items. These alone have paid for my Prime every year I've had it.

For those saying they just want the shipping perks without streaming for around $40, keep dreaming. Amazon is doing this because shipping costs are killing their already razor thin margins. Amazon makes extra money off the streaming side so it's not going anywhere.

I think people have just come to expect too much from Amazon. 84% may say they wouldn't renew, but you can bet that membership will be well above the 50% to make a $40 increase break even.
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#7
Amazon has offered a student member ship that was free initially and the n just half price for a combined total of 4 years. This year is the last year i pay $39. Though $79 i high it is a good service and i would pay that our family does utilize the streaming service and can access it on our tv. For $99 i would start questioning how much benefit i am actually getting as i have already gotten practice price matching them at Target. The people at target already admit that hardly anyone takes advantage of their price matching policy that is why it is so loose. Half the time they dont even bother to double check the price.
If they lower the minimum order back to $25 for addon items for prime members i think i might pay $99.
They are a media company, i wonder what other perks they could offer.
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#8
Quote from Badi2d View Post :
I was a Prime member for 4 years, maybe 5. 2013 was the WORST year. I would say that 1/3 of my shipments did not arrive in 2 days. Initially, I thought it was USPS / UPS / FedEx that was the issue. But then I noticed that the item would ship a day later than it should have, or the method was not two day. I complained to Amazon several times, and warned them I would not re-subscribe, and that was prior to Christmas. Christmas came and it was the same issue, I have now allowed my Prime to expire. Very sad.

Now I just fill my cart and when I have over $35, I order. I do not miss the lame - older selection of Amazon Prime movies.

Now that Amazon charges Tax and Prime is not as much of a benefit to me - I am more free to use other sites and don't feel as though I should game Amazon Prime to get my products. 2 day shipping that is NOT 2 day shipping is not a benefit worth paying for.

Does that make sense?

Thanks - B.A'
I have to totally agree. I do you Amazon Prime Video, but not as much lately. They bait you into watching a series and then want you to pay for more recent series. I'll just use torrents. And the shipping has been horrible. Along with NewEgg, using inferior ship to post office crapola. I had stuff vanish for 5 days, then shows up in my mail box. I dont' think I'll do ANY increase, $20 or otherwise.

Quote from ilovecebu View Post :
The day that amazon starts to charge for tax in my state is the day I cancel my prime account. There's no more advantage anymore for me, after that. I can just price match amazon at my local store and get it same day.
Yup, they started taxing in NV now. It's just NOT a deal anymore.
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#9
Amazon now charges Tax in my state. The poor selection of older movies/TV shows are not very desirable to my family. I have let my Prime membership expire.
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#10
Quote from Badi2d View Post :
1/3 of my shipments did not arrive in 2 days. I complained to Amazon several times, and warned them I would not re-subscribe, and that was prior to Christmas. Christmas came and it was the same issue, I have now allowed my Prime to expire. Very sad.
2 day shipping that is NOT 2 day shipping is not a benefit worth paying for.
'
It's 2 business days, not 2 days. That goes for any online business. If you order at 6pm on a Friday don't complain you didn't get your order by Sunday.

An order at 6pm on a Friday is pretty much the same as ordering on Monday morning. Expect your package by Wednesday or Thursday.
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#11
I can deal with the increase under certain conditions. I'd say at least 1/3 if not half of my packages have been taking more than 2 business days, even if I order in the early AM's. I want my packages on time. Also, once I have to start paying tax in FL I'm done.

As for video, I rarely use it. There are very few titles that aren't on netflix or hulu both of which I hold subscriptions to.
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#12
They need to address the following IMO before considering a price hike:

A) Make Prime Video actually good. Currently it is just a very very mediocre version of Netflix with a much smaller library.

B) Come up with some kind of Prime "Flex" plan that will give users the 2 day shipping on a smaller number of items, but they'd be items which would either be more popular or more tailored to someone's specific buying history. That way you will put an end to people buying everything under the sun just to get the good shipping benefits, I think this is Amazon's main problem, Prime shipping applies to way too much stuff.

Just allow people who want site-wide Prime to pay the new rates, but keep the current rate with some sort of flex option. All I ever really order from Amazon are video games, video game accessories and PC related hardware/devices. It is rare that I order much else, I will only order some kitchen type things when something I currently own breaks down, but typically Amazon is just one big video game and computer store to me, they often have better prices and faster shipping than Newegg.

But if they change Prime then I will probably just use Newegg a lot more often.
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#13
Quote from White_Lotus View Post :
It's 2 business days, not 2 days. That goes for any online business. If you order at 6pm on a Friday don't complain you didn't get your order by Sunday.

An order at 6pm on a Friday is pretty much the same as ordering on Monday morning. Expect your package by Wednesday or Thursday.
White_Lotus - As I said, I was Prime for a long time...And have been a Slick Dealer for longer. So give me a break smart one. 2 Day is business day, and I would assume you would think higher of your fellow Slickdealers than to call them idiots by thinking they thought they could get delivery on a Sunday when they ordered on Friday.

An example for you (my experience). Order placed on Saturday, the item is delivered on Thursday. How many days is that smart one? Happened several times.

Bored and need to unwind? Don't make arguments that are not there just to entertain yourself.
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#14
As a business owner i love using Amazon's prime program because of the free 2-day shipping. I think at the $89 it is now, its a steal. Id rather not pay more, but I would because i buy supplies 4 or 5 times a month for business use and I know that even if i am running low on something, I'll have it in two days.
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#15
I live in a very rural area. Walmart is in another town, 25 mins away. So I really appreciate amazon prime and the ability to order something like diapers and get them at a good price within 2 days. I have done so for about 4 years.

But I am with the person who said the shipping times have increased. Just this last half-year I can tell you several items took longer than 2 days. A year ago I would have had no problem ordering an item and knowing it would be here in time. But recently I didn't order something on Monday I needed for Thursday because I just knew it would be late. I still love amazon because of their stellar customer service, but this is making me a bit nervous ordering if I have to have something within a limited time-frame.

I rarely use the free book service because the selection is random and difficult to navigate. But I watch Amazon Prime a lot. In fact, we do have basic cable, but I watch almost exclusively prime, netflix, hulu and hbogo. Of them all, prime has the best interface. They have lots of good TV shows and it's easy to use.

I would also pay $20 more, but probably not $40. Especially since they are charging tax now and the shipping is unreliable.
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