Pricing Lesson from Amazon’s Steep $20 Annual Membership Hike

I’m a Prime member. I got the email. Thanks Jeff…I still love ya.

When Prime first came out, I was skeptical. I didn’t think I would use it enough in a two-person household. But being a business owner, I quickly realized that Prime saved me the most precious thing in life, and that is time.

I don’t have a need to order items in bulk so much, but I would say that in my home, there is something ordered weekly. And, this next day shipping…now that is the bomb. Amazon has never done me wrong. Not in shipping times, not in returns, and not in service. Are those things that made me forget about the $99 annual fee? You betcha! Now, would it make me re-think my membership with the new $119 a year that goes into effect soon?

I went out on Facebook and asked the question: Would you leave Amazon for the steep $20 price increase? The answer (except for one or two), was resounding NO. People wouldn’t even blink at this increase. The answers made total sense. People value the commodity over the price. They get: efficiency, service, movies, tv, and most of all quick 2 day and 1 day deliveries. It made me realize I do not take full advantage of my membership at all. We are a society of immediacy. WE WANT IT YESTERDAY. Amazon also adds on the additional benefits of not only a marketplace, but movies, music, and tv too. I think I need to cancel my Netflix and Apple memberships. Is all of this worth the increase? Apparently it is. Nice addition to your top line revenue, Jeff!

Now, if we can translate that to our businesses…What is it that you are giving to your customers, ABOVE and BEYOND the commodity or service you are selling? What is that additional X factor or intangible that folks get for buying from you? Do you serve up a dose of customer service and hospitality? Do you give personal attention? Do your clients and customers VALUE what you do and sell? If they do, then a price increase isn’t going to make a’s difference. Amazon is smart. Let’s face it, you couldn’t really make a 20% increase in the real world, but if you start small, you will no doubt keep the customers you have—if they have been loyal and they value your added benefits.

Way to go Amazon….You had me at Prime.




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