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Did Amazon just give itself a $2 billion raise? Prime will now cost $119 a year

Amazon will soon raise the cost of its Prime membership by $20, meaning subscribers will have to fork out $119 a year to make use of its benefits.

And there’s more stirring in Amazon’s massive retail pot, including footballs and cheese balls. Amazon announced the price hike for the Prime shipping and entertainment package during a conference call with investors on Thursday.

Amazon shared other surprises in the same call, including a new deal with the National Football League and the next step with its nationwide chain of Whole Foods stores.

You won’t need to switch channels to watch football. For the tidy sum of $130 million, Amazon and the NFL agreed to stream Thursday night football games online, Reuters reported.

While you’re watching the game, you also may be able to order a tray of organic food snacks from Whole Foods with your Amazon Fire TV without leaving your chair. Amazon told investors the company’s plans to deliver Whole Foods grocery orders directly to doorsteps are in the works.

Amazon had a surprise for Wall Street in the call, too. The company had almost double the expected first-quarter 2018 profits. Reuters reported financial analytics company FactSet said investors expected Amazon’s first-quarter operating profits would be just over $1 billion, but the final number could be as much as $19 billion, almost twice as much.

That profit call was good news for Amazon’s stock price, which jumped 7 percent to a record high and incidentally added $8 billion to Amazon CEO Jeff Bezos’ net worth, Reuters reported.

The Prime price bump

Prime’s $20 increase goes into effect for new sign-ups on May 11. The raise for Prime membership renewals kicks in a little later, on June 16.

It’s the first rise since 2014, when Prime membership increased from $79 to $99.

The news of the increase in its annual Prime membership fee comes a couple of months after Amazon bumped up the cost of its monthly fee for Prime, pushing it from $10.99 to $12.99, working out to almost $156 year. The monthly option launched at the end of 2016 for those unable to pay the lump sum, or who want to use the service for a short time period.

It’s impossible to say what effect, if any, this latest increase will have on Prime customers. Amazon will be betting on most current members taking the hit, though the higher sum may well deter some people from signing up for the first time.

Amazon boss Jeff Bezos surprised many last week. For the first time since Prime’s launch in 2005, he revealed membership numbers for the service, stating that more than 100 million people globally are now signed up.

Bezos also pointed out that in 2017, Amazon shipped more than 5 billion items via Prime worldwide. More people signed up to the service than in any previous year, both worldwide and in the U.S. Launching Prime in Mexico, Singapore, and the Netherlands in 2017 will certainly have given its Prime membership numbers a boost.

It’s not yet clear if, or by how much, Amazon will increase the cost of its Prime services outside of the U.S. If the price for Prime goes up by $20 for all those members this year, the raise adds $2 billion to Amazon’s coffers.

Amazon Prime currently offers members free access to a library of online movies, TV shows, originals, and music tracks, as well as a small number of Kindle books. A range of fast and free delivery options for orders made on its site are also a big part of the package, with members in some locations able to receive deliveries in under an hour for a fee, or in under two hours for free.

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Trevor Mogg
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