Rising Fame, Raising Prices

Are Amazon’s New Prices Justified?

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Stuart Isett

Amazon's headquarters, located in Seattle, Washington.

Janet Han, Photojournalist

Amazon. Online retail superpower, one that seems to have no limits whatsoever. Amazon’s legacy is reaching far and wide, and seems to expand by the second to threaten more and more industries. Of course, many people use or at least recognize Amazon. From Amazon Alexa, a voice assistant, to Amazon Music, there seems to be nearly nothing the company doesn’t do. I

 

n fact, they have over 300 million users as of August 20, 2016- a number which has likely greatly increased. Of those, 80% purchase something at least once a month, while 20% make a purchase on a weekly basis. Amazon’s success comes not only from their wide range of services, but also from a their ability to create a brand name that is trusted and respected by their users.

 

Ardent Amazon users are likely to have Amazon Prime, an exclusive subscription that allows free two day shipping, access to movies, tv shows, music, ebooks, and so much more. Having Amazon Prime, therefore, is essentially a golden key that unlocks an entire host of gifts that just seem to continue giving. Currently, Amazon Prime is set at $99 an year, or $12.99 a month. However, Amazon has announced plans to further increase the price- which seems rather unnecessary given their constantly increasing profits.

 

The new price will be set at $119 per year, a $20 increase. This will result in a lot more revenue for the company, which reportedly already has over 100 million paid subscribers. But the question is, will they maintain all of those subscribers with the price hike? They’re betting on the loyalty and customer satisfaction that many of those users report for that answer. Some even consider the entire deal is a gamble to see if they will be able to win over customers with their continued effectivity.

 

According to Eric Schiffer, the chairman of Reputation Management Consultants, “people love Prime, and they already feel like they’re in the money by hundreds of dollars because of the savings, so no one feels bashed in the teeth.” Hopefully, his predictions will ring true- because otherwise, the price rises could result in many loyal Amazon Prime users opting out.

 

For example, Sarah Chen (10) says she’s a big fan of Amazon Prime, especially because

“the shipping is so fast,” but that it just “doesn’t make sense for them to raise the price when the company is clearly making more money than ever.”

Many other Prime users share her sentiment, which might be a determining factor in whether the new price will be a success.

 

For now, it is still difficult to tell exactly what the outcome of the price raise will be. However, it seems most likely that the company’s predictions will be right- most users are likely to consider the service worth 20 extra dollars, or simply be too loyal to stop using it altogether.