Amazon will be increasing the prices of its annual and monthly Prime subscriptions for all customers in the U.S. The company said prices for annual memberships would be increased from $119 per year to $139 per year, while monthly subscriptions will jump from $12.99 per month to $14.99 per month.
The price increase was announced after the company released its earnings report Thursday. Amazon claims that the price increase is sensible given that they have significantly expanded the benefits available to Prime members. The company said benefits to members now include Prime Video and their expanded free same-day shipping.
Apart from the increased benefits, Amazon admitted that it had decided to raise prices due to the rising costs in the U.S., including those for labor, transportation, materials, and services. Inflation in the U.S. has resulted in an increase in prices of everything from food to electricity over the past few months.
Amazon currently employs more than 1.6 million workers, more than double its workforce in 2019. Last year, the company announced wage increases for tens of thousands of its workers, further hurting its ability to grow its profits.
The last time Amazon increased prices for its Prime subscription program was in 2018 when it bumped its yearly subscription from $99 to $119. Amazon said the latest price hike would take effect on Feb. 18 for new members and after Mar. 25 for those with existing subscriptions.
For its fourth quarter last year, Amazon reported better-than-expected results. The company nearly doubled its profits to around $14.3 billion for the quarter ending in December. Amazon attributed the huge jump in profits to the gains it made from its investment in electric vehicle manufacturer Rivian Automotive. The electric company went public in November.
While the company's North American and foreign e-commerce businesses reported operating losses, Amazon Web Services, the company's largest profit generator, recorded an almost 49% rise in operating income to $5.3 billion. On a teleconference with analysts on Thursday, Amazon CFO Brian Olsavsky noted that AWS added more revenue year over year than in any previous quarter in the company's history.
Overall sales for the quarter increased by more than 9% year over year to $137.4 billion, slightly missing analysts' expectations of $137.6 billion. Amazon said it expects its net sales to grow between 3% and 8% in the first quarter of 2022. The forecast is significantly lower than the 44% sales growth the company had over the same period last year.
Following the release of its earnings report, Amazon's stock price surged by more than 17% in after-hours trading Thursday.
