Amazon (NASDAQ: AMZN) is raising the price of its Prime membership service from $119 to $139 per year starting February 18 for new members and March 25 for existing members; monthly membership costs will rise from $12.99 to $14.99.
The company wrote in a statement on Feb. 3 that the price of membership is being increased because of "the continued expansion of Prime member benefits as well as the rise in wages and transportation costs."
The price bump was announced in the company's fourth-quarter report. The company also reported increases in net sales and net income to $137.4 billion and $14.3 billion respectively in the fourth quarter of 2021, as well as year-over-year increases in net sales, operating income, and net income to $469.8 billion, $24.9 billion, and $33.4 billion respectively.
"Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we've continued to grow on top of that in 2021, our Retail teammates have effectively operated in peak mode for almost two years," Amazon CEO Andy Jassy is quoted in the statement. "It's been a tremendous effort, and I'm appreciative and proud of how hard our teams have worked to serve customers."
"Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic," Jassy continued.
Last April, Amazon announced that its Prime subscriber count had topped 200 million globally, with each household spending an average of $3,000 per year, according to a recent Morgan Stanley (NYSE: MS) analysis. Prime members get access to video and music streaming, cloud storage, and discounts on Whole Foods, as well as free fast shipping.
The company wrote that it "continues to invest heavily in Prime. In the last few years, Amazon has added more product selection available with fast, free, unlimited Prime shipping; more exclusive deals and discounts; and more high-quality digital entertainment, including TV, movies, music, and books."
The last price increase on Prime membership was in 2018, and executives cited the same basic reasons: shipping costs and other service expenses. That increase was from $99 to $119 per year and from $10.99 to $12.99 per month.
Amazon's Prime membership service is dominating the market of online shopping loyalty programs, but both Walmart (NYSE: WMT) and Target (NYSE: TGT) are creating their own programs to challenge the online retail giant.