THE CLARUS Blog

Why Amazon Can Increase the Cost of Prime

Most people have heard Thursday’s news about Amazon’s decision to increase the cost of Prime.

Starting on May 11, Prime membership will increase from $99 to $119 for new members. The new price will apply to existing members’ renewals starting June 16, 2018.

What most haven’t heard is why Amazon increased the cost of Prime.

Amazon knows it won’t lose users due to this value and what the program offers. It has become so ingrained in people’s lives. Amazon has always listened to its customers to make sure being a Prime member makes peoples’ lives better. It’s why Prime is the best premium loyalty program out there.

Quite simply, Amazon provides an incredible value to its members, a value they’re willing to pay for. And Amazon proved this once before.

Not the First Time to Increase the Cost of Prime

Amazon’s only other price increase for Prime came in March 2014 when the program had about 28 million members. In the past four years, that figure has soared to 100 million members.

Prime members are attracted to the program for its convenience (free two-day shipping), simplicity, and slew of benefits.

To illustrate just how vast Prime’s benefits are, let’s take a deeper dive into the program benefits that have been added since the last price hike four years ago:

  • Prime Music
  • Prime Early Access to Lightning Deals
  • Prime Photos
  • Prime Now
  • Prime FREE Same-Day and One-Day Delivery
  • Prime Day
  • Prime Reading
  • Amazon Prime Rewards Visa Signature Card

What’s more, here are some other Prime-related highlights since March 2014:

  • Twitch Prime
  • Prime Photos Family Vault
  • Amazon Music Unlimited
  • Prime Exclusive Phones
  • Amazon Key
  • Business Prime Shipping in US and DE
  • Discounted Prime Offer for EBT Recipients
  • Prime Student Monthly Offer
  • Prime Video App Available on Apple TV
  • Amazon Handmade on Prime Now
  • 5% Back at Whole Foods
  • Discounted Prime Offer for Medicaid Recipients
  • In-Car Delivery Exclusive to Prime

The list of added Prime benefits since March 2014 is quite impressive!

It speaks to Amazon’s unyielding customer-centric focus and desire to attract, engage, and retain Prime members.

Prime’s Benefit to Amazon

The value customers find in Amazon Prime is clear: Prime members spend nearly five times the amount of non-Prime members. Prime provides an unparalleled combination of shopping and entertainment benefits. 

The number of items eligible for free two-day shipping increased in recent years from 20 million to more than 100 million items. Plus, the increase of 72 million Prime members in the past four years is testament to the inherent value of the program. 

That’s why Amazon does everything in its power to increase Prime membership.

Prime Day is solely designed to drive acquisition to Prime.

Amazon chooses to renew its original programming based on “cost per first stream” by new Prime members. This process divides the total cost of producing and marketing an original show by the number of people who stream it after first signing up for Prime.

Another key recruitment tool for Amazon Prime is the free user trials. Users get to see the benefit before paying for it. And the results are staggering: 73% of the trial users become Prime members.

Amazon Prime is a great example of a highly successful loyalty program that doesn’t rest on its laurels. Instead, it continues to scale new heights by listening to its customers and providing relevant and value-based benefits they desire.

See more details about all of the benefits that have been added to Prime in the SlideShare below.

Are You Ready to Go Premium?

If you want to become a 24/7 presence in your best customers' lives, it's time to get started.