Morgan Stanley: It is expected that Amazon will increase Prime membership fees, potentially generating billions of dollars next year

According to Zhitong Finance APP, Amazon (AMZN.US) has not officially announced its price increase plan for the "Prime" membership service in 2025, but analysts are speculating that the e-commerce giant will raise prices again in the coming year. This expectation is based on rising transportation and delivery costs, as well as the expansion of the "Prime" service offerings (including streaming and exclusive content). Another factor is that consumers may realize that the annual fee of $139 for Amazon Prime is actually quite reasonable. JP Morgan analyst Doug Anmuth's in-depth research on Prime indicates that when breaking down all the components of the membership service, the estimated value of the service package is $1,430 per year, more than double the estimated $544 in 2016. This analysis does not take into account Amazon's provision of services at the fastest rate in the company's history. JP Morgan believes that Amazon may raise the price of the Prime membership service in 2026, which aligns with the company's practice of increasing prices approximately every four years. Importantly, the company expects that even if the subscription price is raised to $159, there will not be a significant loss of users or a major impact on the number of new Prime members. A $20 increase in the price of the U.S. Prime membership service is expected to generate approximately $3 billion in incremental net sales annually. Of course, if prices are raised internationally, the increase in sales would be even higher. When Prime was launched in 2005, the annual membership fee was $79. This price remained until 2014, when it increased to $99. Four years later, in 2018, the fee rose to $119, and in 2022, it climbed again to $139. Analyst Julian Lin from the investment team Best Of Breed Growth Stocks also expects the company to raise the price of the Prime product. He stated, "I personally hope they do not raise prices, not only because I have to purchase it myself, but also because this could potentially continue to expand market share." Amazon's decision on Prime service pricing could impact numerous companies, including Walmart (WMT.US), Costco (COST.US), Target (TGT.US), Netflix (NFLX.US), and Best Buy (BBY.US)