Amazon Prime Price Hike Looking Likely
Amazon are set to report this week on how they fared financially for the 2021 holiday quarter, and analysts are suggesting they will raise the price of Amazon Prime, their fast delivery and media subscription.
With all the turmoil brought about by the pandemic, Amazon has had to pay higher wages as well as signing bonuses to attract workers during staff shortages.
They have also had to spend more on shipping as they had issues getting product to the right warehouses.
Amazon are forecasting an operating profit of up to US$3 billion, though analysts are suggesting it will be closer to US$2.5 billion.
As a result, it’s expected a price hike for Prime is on the cards. US annual subscriber fees last increased four years ago, up from $99 to US$119. They went up four years before that from $79.
Netflix raised their subscription fees weeks ago, bumping up in Australia from $16.99 a month to $19.99 in November, and from $14 to $15.50 in the US in January.
Amazon Prime has more than 200 million subscribers globally, with a majority of households in the US, and some analysts point to this power as an easy way for them to push a price hike through.
“They have pricing power because the value proposition is so strong,” says one expert, citing the facts that fuel is so expensive, trucking is more costly, and goods are getting pricier with inflation rising. So a price hike is potentially worth billions to Amazon’s bottom line.
Amazon have declined to comment, though last October their CFO Brian Olsavsky said, “We always look at that.”