Amazon announced in a call with investors on Thursday that customers will see a price hike on their annual Amazon Prime subscriptions starting next month. On May 11, the price of Amazon Prime will jump to $119/year for new subscribers while existing accounts should expect the $20 annual increase to take effect beginning June 16. The company explained the changes are being made because "both the value of Prime and the cost to offer it have increased significantly," adding that the number of items eligible for free two-day shipping have increased from 20 million to more than 100 million over the past few years.
The price hike comes at a time when Amazon reported $51 billion in revenue for the first quarter of 2018. Meanwhile, CEO Jeff Bezos revealed in a letter to shareholders that the number of Prime subscribers had just eclipsed the 100 million mark.
Amazon is estimated to spend upwards of $6 billion this year on content, which ranges from their coverage of Thursday Night Football to the Lord of the Rings television show, the one that cost $250 million just for the rights. Amazon needs to recoup that money somehow. A good place to start is with Prime subscribers.
It’s the first time in four years the company has announced a price hike. In 2014, the cost of Prime jumped from $79 to $99. The increase in annual subscriptions coincides with the 18 percent uptick in monthly Prime memberships, from $10.99 to to $12.99, that took effect in February.