Is Amazon Prime Worth $99 A Year?
I’ve been an Amazon Prime subscriber for a few years now. I was an early adopter, long before the retail giant started adding perks like free access to select Amazon Instant Video content or a free Kindle book rental each month. I signed up during a promotion, paying approximately $40 for my first year. Since then, I’ve paid the standard $80 yearly fee for access to Prime and I will now pay the new $99 fee for access.
To determine if it was a good deal for me, I analyzed my Amazon purchase history over the three previous years. Amazon is kind enough to provide all this data on your Order History page, dating all the way back to 2002 in my case. Specifically, I added up the cost of shipping for all my purchases each year. While I tried to take advantage of free Super Saver shipping as much as possible, I typically averaged about $65 to $75 per year on Amazon shipping costs. This usually included at least one exorbitant shipping fee for overnight or two-day shipping for a nearly belated birthday present.
When I browsed through my email order history with other retailers, it only got worse. Despite my best efforts to locate and use coupons on purchases, my total in shipping costs for all online retailers were at least $125 a year! It doesn’t look like much when getting hit with a $3.99 charge here and a $5.99 charge there, but it all adds up over time.
After tallying up my shipping costs, I took the plunge and signed up with Prime. In the first year, four things happened:
- When I wanted to purchase something I traditionally bought online, Amazon become my starting point before any other retailer.
- Purchases that I traditionally made at brick & mortar retailers (heavy, large or bulky items) became Amazon purchases. Why spend an hour in the store picking up something when it can be delivered to my doorstep?
- I became a procrasti-shopper. As mentioned here, I longer felt the need to group items together to save on shipping or shop for gifts early to leave time for delivery.
- I had to start fighting off the urge to pay $3.99 to upgrade to same-day / one-day shipping on most orders. Unfortunately, I still falter from time to time on something I want immediately.
Interestingly, my order rate more than doubled from 20 to 25 orders per year to 50 to 60 orders per year. I wasn’t necessarily spending more money per year, simply routing a larger volume purchases through Amazon rather than other online and offline channels.
Amazon Shipping Explained
The core feature of Amazon Prime is free two-day shipping on all items enrolled in the Amazon Prime program. When searching for products, you will see the Prime logo beside each item to indicate the two-day shipping is available. There’s also a filter option in the left navigation that allows you to remove all items that don’t come with Prime shipping.
If you aren’t enrolled in Prime, the free shipping option available to you has a couple caveats. You have to meet the $25 minimum purchase threshold and you have to be patient enough to wait 5 to 10 days for Super Saver shipping. However, some items, like video game preorders, offer release date shipping for free. In addition, there are site like this that allow you to search for Amazon filler items to bring up your threshold to the $25 level.
If you want your items faster, standard shipping (3 to 5 days) starts between $2.99 to $7.99 per shipment (depending on the product category) and a per item rate that varies between a flat rate and weight-adjusted rate. For instance, if you ordered this Dell computer, you would pay a $7.99 base rate plus $13.65 for standard shipping. If you want two-day or one-day shipping, the cost rises yet again.
A definite benefit to Prime shipping is not having to fool around with padding your cart with extra items in order to hit that $25 mark. Arguably, you may be able to spend less money on purchases each year if you don’t have to artificially inflate your shopping cart with Add-On items that could end up collecting dust around your house.
Two-Day Shipping Is Cool, But What Else Do I Get?
In the past couple years, Amazon has become very competitive with Amazon Prime perks. If you can’t justify spending $99 per year to cover your yearly shipping costs, you may be able to justify the cost when adding in Amazon Instant streaming video or Kindle Lending Library access.
Accessible through tablets, smartphones, desktops, laptops, video game consoles and set-top boxes like the Roku 3, Amazon Instant Video is a hybrid between Netflix, Hulu Plus and Vudu. While premium purchases are available through the service, Amazon Prime subscribers get access to tons of streaming television shows and movies.
Amazon is currently competing with Netflix for rights to television shows, so you may find exclusives on Amazon Instant Video from time to time. An example would be CBS’s Under the Dome mini-series. New episodes of the show are available to stream for free to Amazon Prime subscribers four days after the show airs on CBS. As an another example, all the seasons of Downton Abbey are currently exclusive to Amazon. Amazon also recently secured rights to stream a huge collection of HBO shows such as The Sopranos, The Wire and True Blood.
Looking at it from a monthly cost perspective, $8.25 per month for access to Amazon’s streaming video library is only slightly more than the $7.99 per month paid for Netflix or Hulu Plus. While Netflix offers a much greater depth of original content and Hulu Plus has a much broader library of recently released shows, the added benefit of Amazon Instant Video is tough to beat when combined with other Amazon Prime features.
Speaking of, if you own a Kindle e-Reader or tablet, Amazon Prime subscribers have access to the Kindle Lending Library. This allows users to borrow one book per month similar to checking out a book from a library. At the start of the next month, the user can borrow a new book. Since the average price of books in the Lending Library is between $5 to $10, that can potentially save a subscriber $60 to $120 a year on Kindle purchases.
Can I Get It For Less Than $99 A Year?
There are four scenarios that will help you reduce the cost of Amazon Prime:
- Sharing is Caring: To justify a regular Amazon Prime subscription, you can share the subscription with up to four members of your household as long as they live in the same mailing address. My fiancée (different last name) uses my subscription constantly and she orders about 2x the volume of packages as I do each year. It’s ridiculously beneficial for large families and brings down the overall yearly cost if you get everyone in the household to contribute.
- Off to College: If you have a student email address, you can enroll in the Amazon Prime Student program. It gives you six months of Amazon Prime for free and students can renew up to four years at a cost of $39 per year. However, you aren’t allowed to share the subscription with family members. In addition, Amazon Instant Video and the Kindle Lending Library aren’t included during the first six months.
- Babies Ain’t Cheap: Ideal for new parents, the Amazon Mom program offers three free months of two-day shipping and 20% percent off diapers and wipes in the Subscribe & Save program. While it also has the same restrictions as the student version, the savings on diapers can be monumental over time.
- Slow It Down: Occasionally, Amazon may provide an option to slow down your shipment in order to reduce the overall price of the order. While the savings are typically nominal, each little bit can chip away at the yearly subscription rate.
When it comes down to it, look at your Amazon order history and weigh the cost of Prime against that with the added perks and/or potential for sharing the subscription with family members. In my case, it was a no-brainer. You can always try out the 30-day free trial to see if it’s beneficial to you. In addition, if you cancel the subscription at any point during the year, Amazon will prorate the remainder of the yearly fee and refund your money.