Amazon Prime price hike, big savings or a big mistake?

Amazon (NASDAQ: AMZN) said it is considering raising the price of its Prime program by $20 to $40 or more. The Prime program, which offers free two-day shipping and access to online movies and books, has been $79 for nearly a decade, but now Amazon says it's getting tough to keep up with the rising costs of shipping.

But would a price hike be a big savings or a big mistake, prompting millions of customers to quit the program altogether?

A recent survey shows that the vast majority of subscribers—86 percent—would consider dumping the Prime program if the price were to jump by $20 to $40. But just because customers say they won't pay higher prices doesn't mean they won't reconsider if, or when, the price does actually jump. For frequent users of the Prime perks, the savings are undeniable. The program averages out to only $6.58 a month and since Amazon doesn't take package weight into consideration, many customers are able to save big on shipping costs alone.

While some consumers say they would not pay the extra costs, other members say they would stay if Amazon were to restructure the program by unbundling the movie streaming. A member in the SlickDeals community suggested "Amazon Prime Lite" where members could take advantage of the two-day shipping sans streaming or books. Customers also said that they would be open to paying a little bit more for the service if the database of movies and books were to be expanded.

Netflix, an on-demand Internet streaming service, increased its price in 2011 and according to reports, it lost over 800,000 subscribers in a single quarter. Though Amazon does not say how many Prime members it has beyond a general figure of "tens of millions," Amazon could still break even if customers leave. The price increase from the millions of subscribers who stay would offset short-term losses from members who cancel.

Amazon said it has not made a final decision on whether or not it will raise the cost for good.

For more:
-See this SlickDeals forum
-See this CNN article

Related stories:
Amazon considers Prime membership price hikes, POS systems for Kindle
Amazon tests flying robots for same-day package delivery
Amazon offers Sunday delivery with U.S. Postal Service
Amazon increases free shipping minimum to $35
Why Amazon Prime Air is a bunch of hot air

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