Why Amazon Is Raising Price Of Prime Membership

SEATTLE, WA - Amazon will increase the price of its Prime service to $119 per year starting on May 11, Chief Financial Officer Brian Olsavsky said Thursday. The news comes on the same day Amazon announced that its first quarter sales rose 43 percent to $51 billion.

This is first time the annual Amazon Prime fee has increased since 2014. That year, Amazon raised the price from $79 to $99 per year. In a letter to shareholders released last week, CEO Jeff Bezos said about 100 million people around the world are Prime members.

Existing Prime members will have until mid-June to renew at the current $99 rate.

Why raise the price now? Olsavsky said during a Thursday conference call that the cost of providing Prime benefits is rising.

"[T]he cost is also high, as we pointed out especially with shipping options and digital benefits, we continue to see rises in costs," Olsavsky said.

Among other benefits, Prime members get free two-day delivery and access to Prime Video, Amazon's Netflix-like video streaming service. Amazon earned about $3.1 billion off of Prime in the first quarter of 2018 - about $75 million less than the fourth quarter of 2017, but up 60 percent from the first quarter of 2017.

Prime members also get access to other deals, like discounts at Amazon-owned Whole Foods, or a free six-month subscription to the Amazon-owned Washington Post.

Amazon stock was up Thursday, trading at about $1,600 per share around 8 p.m.

File photo by Neal McNamara/Patch