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Amazon is raising the cost of monthly Prime subscriptions from $10.99 to $12.99, Recodereports.
The price of monthly subscriptions for students will also increase from $5.49 to $6.49, while the price of annual subscriptions, monthly subscriptions for those with an Electronic Benefits Transfer (EBT) Card, and monthly Prime Video subscriptions, which don't include shipping perks, will not change.
This increase may make Prime less attractive to lower-income consumers. The monthly subscription model was introduced for Prime in 2016, offering a more affordable option for consumers who didn’t want to commit $99 for an annual subscription, and would rather pay for months when they wanted Prime. Increasing the price now, however slightly, may hurt this appeal, as it could push the monthly subscription out of some consumers' price ranges.
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Amazon’s consumer base, as well as Prime’s, is affluent, so lower-income consumers are important for Amazon, as they offer the opportunity to expand Prime’s reach and better compete with Walmart.
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Amazon may be finding it too costly to offer Prime prices that appeal to lower-income consumers. Prime’s free two-day shipping is not cheap for Amazon to offer, which may be why Amazon is raising its monthly subscription cost. While this may be necessary, it could alienate some lower-income consumers. If such customers start to look elsewhere, Amazon will need to find a new source of Prime subscribers, as consumers with subscriptions shop far more often on Amazon, making them quite valuable. The e-commerce titan may further shift its focus overseas, where there is a lot of room for Prime to grow, to find new subscribers.
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