Amazon decides to raise the price of Prime in Spain from 20 to 40 euros for not being profitable. The rise is yet to be determined but points to early 2018
The current price of 19.95 euros per year, of the Prime subscription, will be history in a very short time. Among the company’s plans is to make a strong rise. 20 euros above, that is, the subscription to Prime will cost €40 and will take place during the first months of the next year 2018. The services that are integrated so far in the current option are several. This is the case of Prime Video, access to priority flash offers, Prime Photos, the possibility of reservations on the same day of launch, etc. The issue of prices on Amazon always gives a lot to talk about, for example, we have already seen that Amazon was going to be investigated in the United States for price issues.
The end of a bargain
There were many users who were part of Prime, the well-known Amazon service that eliminates shipping costs and reduces delivery times. Other complementary services arose from this service, as is the case with Prime Video. All of them at very low prices and that are about to change, as far as their cost is concerned. The main reason for this rise has nothing to do with arbitrariness. On the contrary, it is based on the fact that the prices of the Prime service were so cheap that they have become unsustainable.
Prime’s trajectory
When the Amazon Prime Video option arrived in Spain, we verified that Spain had been chosen among five countries, which included the Prime option, called Premium at that time. In this way, the leading company in sales managed to retain a large number of customers. If we analyze figures, an approximate number of two million customers currently use this service in Spain. It was the year 2011, and the price charged for this Premium option was only €14.95. In 2015, this amount was raised to 19.95 euros.
In this way, the final price is 40 euros per year. Remember that users who do not want to continue paying the cost of Amazon Prime, have at their disposal the option of free shipping on all purchases over 30 euros. The announced increase will surely take place after Christmas, during the first quarter of 2018.
It is, among other things, that the increase does not negatively influence the Christmas campaign or the famous Black Friday. Another issue still to be decided is what will happen to those who have already paid the subscription for one year, at the time of the entry of the rise. Among the solutions that are proposed, is to raise the proportional part and to pay the fee after four months.
Countries around us
As we have seen, the current prices are so low that the company’s income is being affected. In different internal studies, the income of the Spanish subsidiary of Amazon is considerably lower than that of other countries. In some European countries, such as France or Germany, the cost of Amazon’s Prime service is between 60 and 72 euros.
In other European countries, such as the United Kingdom, the price is even higher, 89.21 euros per year. A little higher than the case of the United States, where 84.21 euros are paid annually. Of course, the North American giant, Amazon offers complementary services, such as Reading, Rewards, or Music options. Some of these options, and also the possibility of book rentals, are being analyzed to incorporate them into Prime in Spain, and thus justify the next increase.
secrecy at amazon
The secrets about everything that happens on Amazon are very well kept. There is even a device in the internal computer system, which generates a kind of alarm, informing the directors, employees, and middle managers of the company, in the event that they want to find out more information about the account. How is this alarm produced? In a subtle way, receiving an email from one of the managers of the company, offering in a kind way to report on the specific issue. Continuing with this secrecy, we must remember that Amazon does not make public data or figures on the number of users of each service (as is the case with Prime). Not by country, not globally.
Amazon’s opinion
About the next upload, Amazon sources have stated the following:
The decision to raise the price of Prime in Spain had been considered since last year, but was aborted at the last moment. Business was going well, targets were being met, and there was no need to rush. But now it is unsustainable.
It is creating internal tensions: you cannot be demanding revenue growth targets and Prime customers similar to the rest of the countries and at the same time charge such a low price in Spain. It is one thing to offer a competitive price and another to give it away.
Not everything is negative things. Amazon reduces the minimum order from €19 to €10, so if you want to request a shipment in two hours, you will only have to pay a supplement of €2.90.
