- The increase will be from $10.99 to $12.99 per month.
- This is likely to impact its low-income shoppers who can't afford the one-time annual membership fee.
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Amazon has a 'budget-friendly' Prime option for low-income customers — but it's actually a trap (AMZN)
Amazon has raised rates for monthly Prime members and low-income customers are likely to be most affected.
Amazon Prime just got more expensive for some of its members.
Today, the online store announced it would be increasing monthly Prime membership rates from $10.99 to $12.99, which comes to around $156 a year.
These changes are likely to impact its lower-income shoppers who can't afford to pay the one-off price of $99 for a year-long membership.
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Moody’s Lead Retail Analyst Charlie O’Shea said in a statement that Amazon's monthly deal "still affords members a more budget-friendly option, with the ability to ‘flex’ the membership as they see fit.”
But he also noted that the new increase means that monthly subscription members will be paying a 57% premium over yearly members – at nearly $60 extra a year.
Low-income shoppers are often stung with higher prices by not paying one-off fees. The same is true in discount stores, where those that can afford to buy in bulk are offered bigger discounts. A research paper done by two Michigan University professors in 2016 showed that low-income shoppers can end up paying about 6% more per sheet of toilet paper if they don't buy in bulk, The Atlantic reported.
Amazon does not disclose how many of its members pay on a monthly basis versus yearly, but this price increase could encourage customers to switch and pay the one-off annual fee. However, this isn't an option if you don't have the disposable income to cover it.
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