Amazon says it may increase Prime membership fee by as much as $40

A couple of weeks after Amazon boss Jeff Bezos celebrated the company’s “best ever” holiday season while proudly announcing that its Prime service membership base now numbered “tens of millions”, chief financial officer Tom Szkutak said in an earnings call Thursday that the e-commerce giant may have to increase Prime’s annual subscription fee by up to $40.

The service, which gives members free, two-day shipping on particular items, as well as unlimited streaming of Prime Instant Video content and access to the Kindle Owners’ Library, currently costs $79 a year, with Szkutak suggesting a price hike of between $20 and $40.

He said the increasing price of fuel and other shipping costs had forced the e-commerce giant to look closely at the possibility of raising the Prime membership fee, which would amount to a monthly increase of between $1.67 and $3.33. It would mark the first rise in its membership fee since the service kicked off in 2005.

It’s not certain precisely how many people the rise would affect as Amazon has never released specific numbers regarding Prime membership. However, Bezos’s reference at the end of last year to “tens of millions” points to 20 million at the very least. He also confirmed that a million new Prime subscriptions were taken out in the third week of December alone.

In November the company started offering customers the opportunity to purchase Prime membership as a gift for friends or family, while a month earlier it hoped to gently edge more people over to Prime by raising its free-shipping limit from $25 to $35 for non-members.

Szkutak’s comments came on the same day as Amazon announced its Q4 financial figures. Despite revenue of $25.6 billion – up from $21.2 billion a year earlier – and profits of $239 million – up from $97 million in Q4 2012 – the figures fell short of Wall Street expectations and, coupled with a warning of possible Q1 2014 losses, shares in the company fell by around 4 percent Thursday.

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