Amazon announced on March 13 that it will be raising the Prime Membership to $99. At last count, Prime Members accounted for 16 million of Amazon's customers. This fee hike could cost Amazon current and future customers. Amazon announced in January that a fee increase of up to $40 was possible.
The Amazon Prime membership has been set at $79 since its inception in 2005. Current Prime receive the following perks:
Free two-day shipping on any products fulfilled by Amazon (stored in an Amazon warehouse)
Free streaming Amazon Instant Video - Prime eligible shows and movies only
One free eligible Kindle book a month
According to studies, the average Amazon Prime customer spends twice as much as non-Prime customers. One major perk of Amazon Prime is the Instant Video feature as many Americans are ditching cable and switching over to Roku or Google Chromecast. Streaming programming is free of annoying commercials and users can watch what they want when they want as many times as they want in the comfort of their own home. NetFlix is giving Amazon Instant Video a run for its money - users who have both comment that NetFlix has more content and more variety, and everything on NetFlix is included in the $8 a month fee. Amazon Instant Video has had a mobile app for over a year, and NetFlix has just released their mobile app, so the competition is getting fierce. Amazon Instant Video charges between $1.99 and $3.99 for TV episodes or movies that are included in the $8 a month NetFlix fee.
Amazon has been slipping changes in on its customers for the last two years, with the introduction of the Add-On Program for products that are not cost effective to be shipped on their own, and then raising the Super Saver Shipper threshold from $25 to $35 in the fall of 2013. Prime Customers may not feel so special or nurtured when it is time to renew their annual membership. According to Amazon spokeswoman Julie Law, "If you consider things like inflation and fuel costs, a Prime membership valued at $79 in 2005 would be worth more than $100 today." Only time will tell if Amazon Prime customers will vote with their wallet.