Amazon.com Inc plans to hike the annual fee for its popular Prime service by 25 per cent to $99 starting next week, a move announced yesterday that could end up driving customers away. The service had considerably helped drive Amazon's business.
The increase comes about six weeks following the retailer's warning that it might increase prices by as much as $40 to offset rising fuel and shipping costs. Prime, which offered unlimited two-day shipping among other perks, had cost $79 from the time of its introduction in 2005.
According to analysts the $20 hike for Prime was not expected to see users drop the service en masse, though it might hurt Amazon's ability to attract new customers to Prime, which has been instrumental to boosting purchases of goods and digital media.
"We wonder if a meaningful price increase would dissuade some on-the-fence potential Amazon Primers from ponying up for the membership," RBC Capital Markets analyst Mark Mahaney said in a research note, Reuters reported.