“It’s about time,” said Michael Pachter of Wedbush Securities. “Shipping costs have gone up, period.”

Mark Mahaney, an analyst at Evercore ISI, said pitching a price hike would be straightforward: fuel is more expensive, trucking is pricier, and goods themselves cost more. Subscribers – more than 200 million globally, including a majority of U.S. households – would pay more because they want fast delivery, he said. That’s potentially worth billions of dollars to Amazon’s bottom line.

“They have pricing power because the value proposition is so strong,” said Mahaney.
Rival Netflix Inc raised its standard U.S. rate weeks ago, too.

Amazon declined to comment on Prime’s pricing. In October, its CFO Brian Olsavsky said the retailer had no hike to announce, but “we always look at that.” He cited Prime’s value and the time since Amazon’s last increase as points to consider.

Among the factors he did not highlight: reliability. Three people who have worked at Amazon said the company would think twice before raising rates until its operation returned to normal, pointing to some shipping delays. The company had not added a major Prime benefit recently, and it has yet to make one-day delivery the default it promised almost three years ago.

“Given all of the Q4 delivery challenges, raising the price of Prime doesn’t seem appropriate,” said Scott Jacobson, a former senior manager at Amazon, who is now at Madrona Venture Group.

The decision also boils down to math, he said. More valuable than fees is the way Prime changes the behavior of customers, prompting them to spend more on Amazon to make the most of their membership. Would extra subscription revenue outweigh any hit to spending by those who quit?

Amazon said it has worked to minimize how the pandemic and operational difficulties have impacted customers. It said in recent years it has added Prime benefits, such as savings on drugs when paying without insurance, and it has sped up delivery while adding popular programs to stream.

The cause of Amazon’s latest challenges may come into focus in its results Thursday, stemming from a surge in demand, the ongoing labor and supply crunch, or both. The National Retail Federation has said holiday sales rose 14.1% during November and December, beating its prior forecast.

The Omicron variant of COVID-19 has surged, too, albeit at the tail end of Amazon’s U.S. holiday peak.

“You’ve got to believe that Amazon got hit heavily,” Pachter said, agreeing the company’s delivery uncertainties complicated a Prime hike.

“To raise my price when I literally ordered (some) hot sauce and it took like nine days to get here, that would be a poke in the eye.”