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Here’s why Amazon Prime can afford to raise prices

15
Mar
2014

Yesterday morning Amazon emailed it customers to let them know that its Prime delivery service, after more than nine years, was getting its first price hike, from $79 a year to $99. After Amazon first hinted it might raise Prime prices, a study conducted by analysts at Piper Jaffray found that 66 percent of customers said they would rather cancel their subscription or let it lapse than pay a higher fee. But a closer look at the marketplace, and human psychology, shows why Amazon felt confident it could increase its rates without suffering serious fallout. It wont pain Amazon to see these people go.There may be some people who have Prime but don’t rely on it regularly that will cancel because of this, says Wedbush analyst Michael Patcher, who tracks Amazon.

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