In the world of online video streaming and internet shopping, short-term subscription payment services are often used instead of annual contracts. For example, Netflix and Hulu charge their customers on a monthly basis, with pay-as-you-go plans ringing in at $7.99 a month (for basic services).
Amazon Prime, however, charges patrons $79 up front to secure a year of service. But The Washington Post reported that a new recurring revenue model recently appeared on the company’s website, offering consumers the choice to purchase one month of services for $7.99 instead of the annual plan.
Pundits were quick to point out the similarity in price to Hulu and Netflix, two of Amazon’s main competitors, in addition to the fact that 12 “one-month” payments would total more than the current $79 yearly membership fee. But this number is deceiving – since the main draw of Amazon Prime is free two-day shipping on purchased goods, a monthly subscription might be more beneficial to a user who needs to ship a lot of items over a 30-day, not yearly, period.
While Amazon expects to lose a few customers to the greater libraries of videos offered by its competitors, the hope is that the new monthly subscription option will convince wavering patrons to continue to purchase the company’s products and services.