Amazon offers monthly plan for Prime for $7.99?

Amazon offers monthly plan for Prime for $7.99?

I’m seeing reports this morning that Amazon is offering a $7.99 monthly plan for Amazon Prime, as opposed to just the $79 annual plan for most people.

I don’t see that on line yet, but I’m going to write this taking that as a postulate.

This would be a mind-blowingly huge change, and one that would make some investors quite unhappy. It wouldn’t surprise me to see the stock dip a tiny bit (and then recover) on the news.

It might not seem like much of a difference. Pay $79 once a year, or $7.99 a month. In fact, the $7.99 a month is higher that the approximately $6.58 you get if you divide $79 by twelve.

However, it would likely make Prime much more expensive for Amazon…and it’s already expensive for them.

Why?

Simple: you don’t buy things consistently across the year. In November and December, people probably purchase a lot more things from Amazon, especially physical items.

If people can sign up for November, renew in December, and then not renew in January, the customers take advantage of free shipping during the expensive months, and then Amazon doesn’t get the $6.58 during months when the customers order little or nothing.

It would be like people paying for a monthly gym membership just in January (when you get all the New Year’s resolutions people) and then not paying the rest of the year…rather than signing up in January for the whole year.

This suggests to me that Prime is working really, really well to inspire purchases on profitable items. Just as Amazon reportedly doesn’t make money on the Kindle Fire HD itself but hypothetically makes it on inspired sales, Amazon could lose money on Prime and make it up on the items purchased.

For investors, though, they would likely see the loss of the guaranteed income spread out over the lean months and of the up front money of the annual fee.

The marketing on this would also suggest going head-to-head with Netflix, rather than emphasizing the free shipping advantage. Prime streaming video at no additional cost can most easily be compared to Netflix.

It’s hard to compare the KOLL (Kindle Owners’ Lending Library) to something else, since the public doesn’t really perceive a direct competitor to it.

Free shipping is going to be a common perk during the holiday season.

So, if they are doing this, it’s about the videos.

I have to presume this would be automatic renewal: doing nothing, and you get charged another $7.99. Maybe the thought is that most people would just let it ride, even though they could cancel.

Once you have Prime for the videos, why not take advantage of the free shipping?

If you are buying what I like to refer to as those “diapers and windshield wipers” from Amazon, would that become a habit for you?

My guess is that, if this is actually happening, it could work out very well for Amazon in the long run…but that some skittish investors wouldn’t see the long term advantage.

We’ll see what happens. If you are seeing the $7.99 per month option, feel free to let me and my readers know by commenting on this post. It could just have been an experiment or an accidental early leak.

If it does happen, I think Netflix should be worried about it. It could be perceived as “they both have videos” (even though the library is different), but with Amazon, you also get free shipping on other stuff and that ability to borrow a book a month.

Fascinating times…

Update: I’ve now seen the offer on line, although it doesn’t seem to appear in any of the “official places” besides on the join Prime page itself. By signing out of my account,then clicking the Join Prime link at the top of the screen, I could see this under the free month of prime button:

“After your free trial, Amazon Prime is just $7.99/month”

Thanks to Meya, a Kindle Forum Pro, for posting that.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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15 Responses to “Amazon offers monthly plan for Prime for $7.99?”

  1. Jennifer K Says:

    Hi, Bufo! I find it interesting that Amazon may offer a monthly option for $7.99. For a brief moment I did think “Hmmmm……would I benefit from that more than Netflix?” I’ve been contemplating adding Prime to my account for awhile now. Moments ago I placed the order for my daughter’s Kindle Fire HD for Christmas. You may be interested to know that when I clicked checkout it took me to a screen for Prime and offered me $20 off my first year of membership. Sold! I must applaud their tactics as it certainly worked with me. Also, I almost made a huge mistake when placing my order. Something others may not realize. I was ordering myself a Paperwhite for Christmas. I initially had it in the same order as my daughter’s Fire and our new cases. The order screen showed that my Fire and cases wouldn’t be shipped until my Paperwhite shipped! Now that scared me since the Fire is for my daughter for Christmas and I would be a nervous wreck worrying about whether or not it would get here in time. Although I’m anxious to get my hands on a Paperwhite, since I’m buying it for myself it’s no emergency if it gets here late. I removed the Paperwhite from the order and now everything is scheduled to be delivered in two days (woohoo Prime!) I ordered my Paperwhite separately and problem solved.

    • Bufo Calvin Says:

      Thanks for writing, Jennifer!

      Yes, that order combination thing can be tricky…always worth checking. I”m glad you got it figured out.

      We didn’t do Prime for a long time, but now, we use it a lot. That $20 off deal is interesting…thanks for posting it!

  2. cjseasyaspie Says:

    That would make me… a long-time Prime member… very unhappy.

    I’ve been paying the Prime fee for years… whether I “needed” it or not… because it was so great to have when I did need it…

    But if I can get the same benefits simply by signing up when I need it… and pay nothing the rest of the year, why not?

    I would cancel my annual Prime membership and just pay monthly on those months when I would be ordering a lot… such as holiday times.

    • Bufo Calvin Says:

      Thanks for writing, cjeasyaspie!

      I’m not sure why you’d be unhappy. You could continue to do it the way you had, or pay a bit more on a month-by-month basis. So, nothing has changed unless you were to take the new option.

  3. thingsajillion Says:

    It could be a good way to get new subscribers that don’t want to come up with the yearly $79. (in case the don’t like the service and for people that prefer monthly payments) I personally LOVE Prime and wouldn’t be without it! I hope they keep the yearly option as well, since that’s my preference!

    • Bufo Calvin Says:

      Thanks for writing, thingsajillion!

      I think they’ll make both options available.

      Of course, people who want to try out Prime have been able to do the free month, so I”m not sure how much the month-to-month helps with that. It does, though, allow people to use it without the $79 up front, and I think that would be attractive. Also, you might know, for example, that someone on your account was moving into a new house one month…that might be a good month for the $7.99 Prime.

  4. Lady Galaxy Says:

    I wonder if the new plan would replace the $79 or just be a second option similar to the way some insurance companies allow you to pay your premium once or twice a year for a lower annual price than if you pay in monthly installments.

    • Bufo Calvin Says:

      Thanks for writing, Lady!

      I think they’ll have both options: $7.99 per month, or $79 per year. $7.99 * 12 comes out to $95.88, by the way.

  5. Angelo B. Says:

    I am a (mostly) satisfied Netflix streaming customer and totally satisfied Amazon Prime customer, but I don’t consider them to be competing services. For me, the free two-day shipping is the reason to subscribe to Prime. The KOLL is a nice perk but not a deal maker. However, the Netflix streaming library is far superior to Amazon’s Prime library and the reason I am still a Netflix subscriber. I’ve been waiting and hoping for Amazon to expand the Prime content beyond the meager offerings they added in the past few months but they’ve got a very long way to go. To be frank, the Prime offerings are not much more than old movies and even older TV shows that most of us have already viewed multiple times. I hate to criticize Amazon as it’s my favorite retailer by far, but I think it’s a stretch to compare the Prime video selection with Netflix’s streaming selection.

    • Bufo Calvin Says:

      Thanks for writing, Angelo!

      I also have both, but Amazon has done a ton with Prime streaming recently…I’m not sure if you’ve looked at the offerings since the Epix addition in September?

      They now have a lot more recent movies. For example, some movies that were theatrical releases last year:

      Rango
      No Strings Attached
      Thor

      Does that match Netflix?

      Nope: they have movies that were in the theatres this year.

      The Prime selection has been growing, though, and Amazon has been spending a lot of money on it.

      For me, Prime doesn’t match Netflix, but it is getting closer. Prime is still mostly about the shipping…but going to a $7.99 monthly fee seems to me like positioning it against Netflix…

  6. Zebras Says:

    I had Netflix, I think I cancelled it when TV season got busy, and at some point decided since I already have Prime, I shouldn’t also pay for Netflix, I just pay the rental fee for the one or two movies that aren’t prime, that I want to see once in a while. But I joined Prime back when it was just free shipping, so videos and KOLL is still kind of gravy to me. I think they are counting on people trying it out for more than just the free month, and getting hooked.

  7. D. Knight Says:

    I signed up for a month’s trial to a prime membership when Amazon first announced prime, and promptly cancelled when the trial was over. I ignored prime for a couple more years when Amazon offered me a free 3 month trial. I signed up again. I had every intention of just cancelling again, but before the 3 months were over I was hooked–it is nice to be able to just get an order in a couple of days without trying to make sure it was over $25. And that was before KOLL and prime streaming video. I would not have kept it if it had only been a month, so I guess that this may get more people on prime in the long run.

    Interestingly enough, when I look at my prime membership page, it says I’ve been a member since the beginning date of the first free one month trial, even though a couple of years went by before I became a paying member and started really using prime.

    Regarding competition with Netflix: I also have both Netflix and prime. IMO, Amazon won’t really match Netflix until (a) it improves the selection, and (b) the Watchlist gets easier to use. I’ve added several things to my Amazon Watchlist that I just can’t find when I want to watch something later. Have you figured out how to use the watchlist?

    • Bufo Calvin Says:

      Thanks for writing, D.!

      The interface for Amazon Instant Video could definitely be vastly improved. One big lack compared to Netflix is being able to start watching again something you were in the middle of watching. On Netflix, it’s in a Recently Watched “shelf”, and it automatically shows you what you were watching last.

      With the Fire and Amazon, you go to the Videos tab. Your Watchlist does appear there as a shelf (below Prime Instant Video), but I don’t think it pays attention to what you watched last. For that reason, I haven’t put all that many movies on there…just to hard to swipe through looking for them. It is nice that I can also access it through my Roku, though.

  8. Round up #130: Fictionwise shuts down, the Bezos buzz « I Love My Kindle Says:

    [...] I wrote recently about Amazon offering their Prime membership on a $7.99 a month basis (rather than they typical $79 annual fee). [...]

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