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Summary:

Amazon has said it may raise the yearly cost of a Prime membership. In two surveys, Prime members say they wouldn’t pay more — and their reasons are revealing.

Amazon Package
photo: Flickr / William Christiansen

How much do customers value Amazon Prime — and which of its perks are most important to them? Two recent surveys offer some answers.

During Amazon’s most recent earnings call, CFO Tom Szkutak revealed that the company is considering raising the price of Prime, which offers unlimited two-day shipping, streaming video and other perks for $79 per year. “With the increased cost of fuel and transportation as well as the increased usage among Prime members, we’re considering increasing the price of Prime between $20 to $40 in the U.S.,” Szkutak said.

Obviously, Prime subscribers don’t want to pay more for the service. But will they, if they have to? The surveys — one from UBS, the other from deal-sharing site Slickdeals — claim the answer is no.

UBS’s survey of 300 Amazon customers, which analyst Eric Sheridan described in an investor note Wednesday, was conducted with securities research firm Consumer Intelligence Research Partners “to survey Amazon customers in the U.S. from February 4-7, 2014.” Sheridan was “negatively surprised” by the results:

“[W]hile 94% of Amazon Prime customers surveyed indicated a likelihood of renewing (‘definitely will renew’ or ‘probably will renew’) at the current $79 annual fee, these percentages dropped precipitously when price increases of $20 and $40 were introduced (to 58% and 24%, respectively). Our survey results call into question our prior views about the value that a broad set of consumers are applying to the current iteration of Amazon Prime. If Amazon were to raise Prime fees, such a fee increase might need to be accompanied by either a) a higher level of value in the service offering (additional media content, streaming music and/or Fresh (supermarket) offerings) and/or b) an increased level of marketing around the perceived value of Prime to the general public.”

The second survey, from Slickdeals, is much more informal. I ignored a press release I got about it a few days ago, since it sounded more sketchy than scientific. Yet the survey results — and comments from Slickdeals users — are largely in line with what UBS found.

About 87 percent of respondents to a poll on Slickdeals’ site said they would not “pay $20 to $40 more for Amazon Prime.” That was just 73 people, but subscribers also left a couple hundred comments in Slickdeal’s forums and on its Facebook page that seem to echo UBS’s findings about the value that customers see in “the current iteration of Amazon Prime.”

Get more to pay more

Prime already offers more than it did when it launched nine years ago: There are a lot more products are eligible for two-day shipping and members can now take advantage of Prime Instant Video, a library of streaming movies and TV shows. Those who own Kindles can also borrow one ebook a month for free, from a library largely consisting of self-published titles (along with some big series like “Hunger Games” and “Harry Potter”). In its third-quarter earnings release, Amazon said it had added “millions” of Prime subscribers during the quarter and attributed that in part to Prime Instant Video.

amazon prime instant video

Yet a number of the comments on Slickdeals’ Facebook poll fit with UBS’s suggestion that members don’t find those perks alone worth enough to pay more for them, and a recurring theme is that some users don’t see video as being something they want to pay more for.

  • “Probably not. I’d continue paying $79/year for the two day shipping which is what I originally signed up for.. They should offer a ‘shipping’ plan and a ‘shipping/lending library/VoD/etc’ package.”
  • “It’s already too expensive for what you get. I just want the 2 day shipping. I don’t want to be paying for licensing fees to a limited selection of crap I’m never going to watch. Get back to the basics Amazon. You ship stuff. Let’s focus on that.”
  • I don’t care, as long as I get grandfathered into my current rate. If not, it’ll be a big fat no from me. Even a $20 price increase is faster than the current rate of inflation, especially considering they are adding ridiculous stipulations like ‘Add-on’ items. I love Amazon, but this is kinda like what Netflix did a couple years back. A total slap in the face to the customers who helped build their company up.”
  • “Prime Shipping has been pathetic lately. If it was actually 2 days like it used to be, maybe. If you could share the movie and kindle benefits with guest accounts, maybe. They need to change a lot if they plan to increase it so much.”
  • “If they changed it to one day shipping then maybe. Otherwise, no.”

The trend that emerges is different from what Amazon said on its conference call: Many users still seem to see Prime’s primary value in fast shipping (and there are plenty of complaints about delayed orders and “add-on items,” cheaper or lighter products that don’t ship out until a Prime member has $25 worth of stuff in their cart). At least some members see video as something they didn’t ask for and don’t want to pay more for.

Cutting video from a standard Prime membership likely wouldn’t save Amazon money, though. Szkutak cites fuel, transportation and increased usage as the reasons that Prime prices might need to increase. He does not mention licensing fees.

When push comes to shove…

There’s a difference between complaining about paying more and actually canceling your Prime membership if the price goes up. (Though as Publishers Lunch points out, the fact that members would have to be notified about the increase might remind some of them to cancel.) And even if Amazon doesn’t give longtime Prime members grandfathered status in the event of a price increase, there are already ways to get around Prime’s current $79-per-year price: Students pay $39 a year, for instance; American Express Blue Cash cards give members a year of Prime free; and Amazon Mom members (who don’t actually have to be parents) get three months of Prime free.

Nonetheless, the findings from UBS and Slickdeals suggest that some Prime members already see enough flaws in Prime that they’d seriously reconsider their membership if the price increases. CEO Jeff Bezos likes to say that some things never change: Customers are never going to want to pay higher prices, and they’re never going to want items to arrive more slowly.

Along those lines, it’s clear customers are never going to want to pay more for Prime — no matter how many perks it adds. But will they actually drop the service?

  1. If I could get rid of Netflix because Amazon actually provides VOD to Android and the many other places you can watch Netflix and also has the same amount of free quality content then I would pay $60 bucks for 2 day shipping and $99 for Prime Instant Vid. As long as I have to have Netflix and Prime Instant Video then all I’m paying for is 2 day shipping. So pissed that they don’t provide a Prime Video app on Android. I don’t count Kindle Fires as Android. Yet they have an iPad video app. Stupid. Figure your crap out and you may still win me over and get more of my money.

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  2. I’ll cancel and I don’t care who believes me.

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  3. I will be canceling either way. More often than not, “Amazon is not filling this order” so shipping ends up being more like 10 business days, and even amazon has had more delays with little explanation.

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  4. very often it is not two day shipping, the unlimited video streaming’s selection is okay at best and I have enough things to read without the monthly offerings. I have 2 kindles, a fire and an e-reader, and like the company, but amazon prime is not worth more than $79. if there’s a price increase, I will cancel.

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  5. This is like Reed Hastings – DVD fiasco. Bezos is stuck with $79/year. He has to solve his cost problem.

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  6. I don’t have Prime even though we bought a kindle HD back in Oct. We just don’t buy enough from Amazon to see the value in the annual fee. Sure we buy some stuff, but usually just get the purchase over $35 and we are good. Amazon’s prices are good, but like I said we just don’t buy enough stuff. Plus having a Wal-Mart less than a mile from my house gets me most of what I need. Heck these days I am trying hard to stop buy crap I don’t really need.

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  7. It’s pretty clear from this and from the hidden limitations they have put on it’s use that they consider the Prime program a serious mistake. The price increase will be their way of killing it when there are many fewer users to complain.

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  8. Interesting. I will easily pay an additional $20 for Prime. Wasn’t it $99 at one time? I have been a Prime member since they first launched it in 2005. I think at $99 it is still an excellent value.

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  9. They need to work on their Prime Instant UI. While they’ve got something good going with AWS, they need to work on their “search interface is video browser interface”.

    There are titles on Prime Instant that i cannot get on Hulu. Not sure i would pay more. I might be going back to my younger days when we didn’t have a TV and i read a lot of books.

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  10. Frank Fletcher Tuesday, March 4, 2014

    Prime was nice when they actually had 2 day shipping. BUT, I have found that many Prime eligible purchases, do not get to me in 2 days anymore. This is especially true if the item is prime eligible but does not come from Amazon. So, what the heck kind of deal is that? I pay for Prime but don’t get Prime.

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