Are Amazon Prime Perks Worth the Cost? (AMZN)

An increasing number of people spend more time on the internet, not only for information purposes, but also to be entertained, communicate and even do business. It is not surprising then that online retail giant Amazon.com, Inc. (NASDAQ:AMZN) wants to have an even bigger slice of the already large and still rapidly increasing online market, with their Prime service covering multiple aspects of consumers online needs. The service can indeed be very enticing, but is worth spending an extra $100 a year for?

Looking at the company’s “About Amazon Prime” page on their website, there is quite the long list of benefits and perks that you can get from a membership. These benefits can be summarized down to a few general points.

Amazon Prime Members get:

• Free Same Day or 2 Day shipping, depending on the member’s location
• Unlimited Access to Amazon’s Media Services (Prime Video, Prime Music, Kindle Library)
• Special prices and discounts on products available at the Amazon Online Store

Considering what a member can get from Prime, it definitely is great value. In fact, Amazon is actually losing a substantial amount of money just to provide Prime members with their shipping perks. According to industry analysts, Amazon spends an extra $1 Billion a year for Prime shipping. However, the question of whether or not a Prime membership is a fit for you largely depends on what your online habits are.

Shop on Amazon a lot? Get Prime!

If you are only after the media-streaming services of Amazon then you would be better off signing up for an Amazon Instant Video Membership instead, which is cheaper in the long run. Also, competing streaming services like Netflix (NASDAQ.NFLX) might also be more attractive for you.

That said though, if you make a lot of Amazon purchases throughout the year then Amazon Prime is definitely worth the extra cost. In the U.S., a 2-pound package costs around $10.00 to ship on average. So if you purchase from Amazon, let’s say at least 10 items yearly, then your Prime membership would have paid for itself. You can save even more money if you tend to make online purchases that are heavier and bulkier if you are a Prime member. Access to the other services of Amazon then becomes a huge bonus, and considering that the company is very aggressive in investing on their video and music streaming, you will certainly be getting a lot of bang-for-your buck with an Amazon Prime membership.

To add even more value, you can actually try out Amazon Prime for free for a 30 day period. Not only will the service give you the shipping perks that can be a money saver, but you will also get to experience Amazon’s media services and see if it is a great fit for you before you sign up.

From purely a business standpoint, it may seem like a bad idea for Amazon to lose so much money on the perks that they give for Prime members. However, analysts agree that this is just part of the company’s long term plan. Amazon believes that the future is irreversibly online. With Amazon Prime, the e-commerce giant aims to be part of this future for consumers all over the world.

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