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Amazon Prime's flat fee could increase $20 to $40 in US, reveals CFO after fourth-quarter earnings results
1/30/2014 11:05:00 PM
Amazon didn't do as well as expected in the fourth quarter, so it is considering something it hasn't done in years: increasing Amazon Prime's yearly fee.
Amazon's Q4 2013 earnings results revealed a profit of $239 million. That's more than double what it had in the year-ago quarter. Amazon also earned $25.59 billion in revenue during the quarter, which is, again, an increase from the year-ago quarter.
As for the full-year profit, it only amounted to $274 million. That's better than the $39 million loss from 2012, but the company still missed analysts' expectations of 66 cents a share on $26.06 billion in revenue. Amazon is therefore likely looking for ways to increase revenue.
One such way is raising the price of its $79-per-year Prime service in the US by $20 to $40, according to Tom Szkutak, Amazon's chief financial officer. Amazon Prime, which launched nine years ago and has millions of subscribers globally, is a free two-day shipping service for a flat annual fee.
That fee has remained unchanged for quite some time. However, Szkutak confirmed during the company's fourth quarter earnings call with analysts that Amazon is "considering" a price hike in the US. He didn't blame the potential change on a dismal quarter though - but rather the higher cost of shipping today.
READ: Amazon Kindle gets a price cut, now only £59
In a similar move, Amazon recently altered its minimum amount for free shipping on non-Prime product orders to $35. Amazon didn't explain why it raised the minimum by $10, but many now assume it was also related to the higher cost of shipping.
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