Why The Price Of Amazon Prime Was Raised From $99 To $119

Amazon.com, Inc. AMZN reported its first-quarter results Thursday and also announced a price increase to its annual membership program.

What Happened

The company said it will be increasing the price of its Amazon Prime membership program from $99 to $119 effective May 11 for new members; Existing members will see the price increase on June 16.

A Prime membership offers members quicker delivery options along with a plethora of added benefits, including streaming music, streaming video, unlimited photo storage on its cloud platform and more.

Why It's Important

Amazon CFO Brian Olsavsky said during the company's post-earnings conference call that it hasn't raised prices for Prime members in four years. At that time, members had access to 20 million products that can be shipped in two days but today that number stands at over 100 million products and "many, many, many" more that can be delivered in one day.

"So there's all kinds of new features that we've continually added to the Prime program," Olsavsky said. "It's much different than it was in 2014. That is a reflection of that, that's a better reflection of the cost value of the program."

What's Next

Investors should be reminded of a 2017 survey that polled Amazon Prime members if their membership is worth the price. Nearly 15 percent of respondents to a LendEDU survey said they don't think their $99 fee is worth the cost. Moreover, 22 percent of members wouldn't renew their membership if it were raised by just one dollar to $100.

Shares of Amazon were trading up more than 7 percent to $1,634.85 Friday morning.

Related Links:

Amazon Prime Reaches 100 Million Member Milestone: Here's What It Means For The Stock

KeyBanc Survey: Two-Thirds Of US Households Have Amazon Prime Memberships