- Rafi Letzter/Tech Insider
- Amazon is raising Prime membership fees for people who pay monthly.
- The increase will be from $10.99 to $12.99 per month.
- This is likely to impact its low-income shoppers who can’t afford the one-time annual membership fee.
Amazon Prime just got more expensive for some of its members.
Today, the online store announced it would be increasing monthly Prime membership rates from $10.99 to $12.99, which comes to around $156 a year.
Amazon Prime is a subscription service that offers its paying members services such as free two-day shipping on certain purchases and unlimited streaming of movies and TV shows with Prime Video.
These changes are likely to impact its lower-income shoppers who can’t afford to pay the one-off price of $99 for a year-long membership.
Moody’s Lead Retail Analyst Charlie O’Shea said in a statement that Amazon’s monthly deal “still affords members a more budget-friendly option, with the ability to ‘flex’ the membership as they see fit.”
But he also noted that the new increase means that monthly subscription members will be paying a 57% premium over yearly members – at nearly $60 extra a year.
Low-income shoppers are often stung with higher prices by not paying one-off fees. The same is true in discount stores, where those that can afford to buy in bulk are offered bigger discounts. A research paper done by two Michigan University professors in 2016 showed that low-income shoppers can end up paying about 6% more per sheet of toilet paper if they don’t buy in bulk, The Atlantic reported.
Amazon does not disclose how many of its members pay on a monthly basis versus yearly, but this price increase could encourage customers to switch and pay the one-off annual fee. However, this isn’t an option if you don’t have the disposable income to cover it.
A survey of 7,000 people across America done by GoBankingRates in 2016 showed that as many as 34% of people have no savings, 69% has less than $1,000.
Amazon’s price increases seem to be going against the grain of its initiative last year to offer a cheaper membership to shoppers on government assistance. Customers with an Electronic Benefits Transfer (EBT) card can now qualify for a reduced $5.99 monthly membership. These rates have not been changed.