Wednesday, November 07, 2012

Amazon's New Monthly Plan

In a departure from its previous strategy of charging a yearly fee ($79.99), Amazon will now offer Amazon Prime (free shipping and some streaming content) at a monthly rate of $7.99.  Although the new option is potentially more expensive, it offers consumers greater choice and, as a behavioral economics play, may raise additional revenue as many customers are not sophisticated enough to closely monitor their memberships.  Additionally, the article mentions that this is an assault on Netflix, which offers similar content at a similar price, but does not have free shipping or other perks that Amazon offers.

http://tech.fortune.cnn.com/2012/11/07/the-truth-about-amazons-8-monthly-plan/?iid=SF_F_River

1 comment:

Unknown said...

Very interesting. Personally, I like the idea of the monthly plan, because I signed up for Prime when I first moved between apartments, and I really only needed it for that month.

Also, on a somewhat related note, it's interesting how Amazon successfully steals marketshare from Netflix, given that a very large portion of Netflix's online streaming is hosted on AWS (Amazon Web Services).