The Economics Of Amazon Prime

March 14, 2014 in Daily Bulletin

Amazon recently announced that it was increasing the price of its Prime membership to $99. The membership guarantees that millions of Amazon’s items will be delivered within two days. Zachary M. Seward took a look at its price:

  • When Amazon Prime first launched it was priced at $79 a year. A wide misconception is that this price was chosen because it was a prime number.
  • Rather, the “Prime” refers to the prime location that items that are delivered within two days occupy in Amazon’s warehouses.
  • If the price of Prime had kept up with inflation, the service would cost $94.26 today.
  • However Prime itself has involved and now it also offers customers video streaming and e-book rentals.

Read more about how the price of Amazon Prime was first set, why Amazon wanted to make sure it didn’t “hemorrhage money”, and more over here.

Source: Quartz