In its earnings call Thursday, Amazon announced it would increase the price of its Prime membership annual plan from $99 to $119.
Amazon Prime’s price is about to go up. Anyone in the United States who wants a new annual membership has about two weeks to subscribe before the cost jumps 20%.
Starting May 11, the cost of an annual Prime membership in the U. S. will rise to $119 from $99. The increased price will apply to renewals starting June 16.
Amazon.com Inc. last raised the cost of a Prime membership in March 2014, and in an earnings call Thursday, executives emphasized that the value of a Prime membership has evolved since then.
Two-day shipping is available on more than 100 million items, up from 20 million in 2014. For Los Angeles residents, a Prime membership can mean same-day delivery for a variety of goods, including two-hour delivery of groceries from Whole Foods.
«The value of Prime to customers has never been greater,» Brian Olsavsky, Amazon’s chief financial officer, said Thursday in a conference call with analysts. Providing the service has grown more expensive for Amazon, he added: «Especially with shipping options and digital benefits, we continue to see rises in costs.»
Olsavsky said that for people who can’t swing the annual membership, a monthly membership of $12.99 is still available. (The price of an annual membership works out to less than $10 a month, but subscribers must commit to a full year.)
Piper Jaffray analysts said in a note to investors that they don’t think the price increase will make a meaningful number of Prime members quit the service. They said that members will still get a lot for their money, and that subscribers of similarly priced services — Netflix, for example — haven’t tended to quit because of price increases.
Prime has an estimated 77 million U. S. subscribers, according to Piper Jaffray’s survey work. If 80% of those subscribers pay the new higher annual membership price, that would boost Amazon’s revenue by $1.2 billion, the analysts wrote.
Amazon’s stock jumped to a record high Friday, as much as 7.9% to $1,638.10 before subsiding somewhat. The company reported quarterly earnings after markets closed Thursday, and investors cheered its unexpectedly large leap in profit.
The world’s largest online retailer also forecast second-quarter profit that topped analysts’ forecasts, buoyed by swelling ranks of Prime subscribers and a profitable cloud-computing division that’s attracting more corporate customers.
Amazon projected operating income in the current quarter of $1.1 billion to $1.9 billion on revenue of $51 billion to $54 billion. Analysts estimated operating income of $1.13 billion and sales of $52.3 billion.
Bloomberg was used in compiling this report.
jaclyn.cosgrove@latimes.com
@jaclyncosgrove
