Is Amazon Prime Worth It?

FT Contributor  | 

Amazon.com is the largest retailer on the planet, and its Amazon Prime program has more than 100 million subscribers in the U.S. Although most people know that a Prime membership offers free two-day shipping on all purchases, the service also offers a range of other benefits. Still, the $119 annual price tag begs the question of whether Prime will fit into your budget

Amazon Prime Benefits

Subscribing to Amazon Prime provides a number of benefits, from shipping to digital photo storage. Their value depends largely on your shopping habits and how you use them.

Two-Day Free Shipping

Perhaps the most well-known benefit of Amazon Prime is the two-day free shipping on almost everything. Some items are even eligible for free next day shipping, and in some cities, items might even be delivered within a few hours. If you won’t be home to receive your packages, you can also pick up Prime deliveries at a nearby Amazon Locker.

Although receiving your Amazon orders in two days is appealing, Prime members also have other options to manage shipments. If you agree to a longer delivery time frame (usually three to five days), you’ll typically receive a bonus in the form of a credit to use toward other purchases, such as digital downloads. If you place multiple orders, you may also have the option of scheduling an “Amazon Day” delivery to consolidate them into a single delivery. In addition, if you pre-order items, Amazon Prime ensures that they will be delivered to you on release day.

Prime Now is another delivery option in some ZIP codes, offering two-hour grocery delivery. In addition to items from Amazon and Whole Foods Market, in certain cities (Los Angeles, New York, Portland, San Diego, Chicago, San Francisco Bay Area, Seattle, Dallas/Fort Worth, Minneapolis, Indianapolis, Milwaukee, Austin, Sacramento, Denver, Atlanta, and Phoenix), Prime Now will also deliver items from partner restaurants and stores.

Video Streaming

Amazon Prime also includes a video streaming service, offering a selection of movies, television shows, and original content such as “Jack Ryan” and “The Marvelous Mrs. Maisel.” Any digital video content marked “Prime” can be watched free as part of your membership.

Free Books and Magazines

Amazon began as an online bookseller, so it’s no surprise that free books and magazines are included as part of the Prime Membership. Members can download current issues of magazines from a rotating selection of titles from the Newsstand each month. Prime Reading also provides access to a large selection of books that you can read for free using the Kindle app. The service allows you to borrow up to 10 titles at once.

Music Streaming

Amazon Prime also includes access to Prime Music, a library of more than two million songs you can listen to for free. In addition to full albums, you can stream playlists and stations, skip songs, and listen from any device.

Prime Day Perks

Every summer, Amazon hosts “Prime Day,” offering items at deep discounts for 36 hours. New items go on sale every hour, and you can often find deep discounts on big-ticket items like televisions and smartphones. You have to be a Prime subscriber to take advantage of the deals, but as a member, you’ll get alerts to new deals as they drop.

Unlimited Photo Storage

As a Prime member, you don’t have to let photos fill your hard drive, or risk losing them if your computer fails. Prime members enjoy unlimited photo storage, and you can connect your phone and computer directly to your Amazon Photos account for seamless uploads to your own secure Amazon Cloud Drive.

Prime Pantry

Prime members can save money on everyday household items, including snacks, cleaning supplies, and other basics, through Prime Pantry. When you add five items to your pantry order, you save 5%; orders of 10 or more items save 10%. If you spend $35 or more on a pantry order, shipping is free. Otherwise, you’ll pay $5.99 to ship Pantry orders, which take one to four days to arrive.

Amazon Family

Amazon Family saves families money on everyday items such as diapers and baby food; the average discount is about 20%. Families can sign up for Subscribe and Save offers on necessities as well, setting up regular automatic deliveries for a discount.

Prime Wardrobe

Buying clothing online can be tricky, so Prime Wardrobe aims to take some of the risk out of your purchasing process. With Prime Wardrobe, you can add up to eight items from designated brands to your cart and have them shipped to you to try on. You may return any items you don’t want for free, and only pay for the ones you keep after seven days.

Amazon Subscriptions

Amazon Prime offers access to a variety of subscription products. Via their Subscribe & Save program, you can set up automatic deliveries of certain products on your schedule and enjoy a discount on your purchase of 5% to10%. You may also subscribe to magazines and streaming channels through Amazon. For example, you can add a subscription to HBO Now to Prime Video for an additional $14.99 per month.

Amazon Credit Card

A separate but related product, Prime Members may also sign up for the Amazon Prime credit card. The store credit card provides 5% cash back in the form of rewards that can be used toward future Amazon purchases or redeemed as a statement credit. You also have the option of forgoing the rewards in exchange for special financing offers.

How Much Does Amazon Prime Cost?

Amazon Prime costs $119 per year. Student memberships are $59 per year. If you opt for a monthly membership, the fee is $12.99 per month, or $155.88 ($6.49 per month or $77.88 for students.)

What’s the Value of Amazon Prime?

Given the cost of Amazon Prime, what is its actual value? That depends largely on your own spending habits and how you use the service.

The biggest savings for most people comes from Amazon Prime’s free two-day shipping. Without Prime, you must spend at least $25 to get free shipping, and your items may take longer than two days to arrive. If you opt for same-day delivery, you can expect to pay $9.98 per item without Prime. For two-day delivery, shipping charges are likely to be $15 to $20, based on current USPS rates. Therefore, assuming you place two orders per month, you could be saving $30 to $40 on shipping, or $360 to $480 per year on two-day shipping charges.

Looking at the other features of Amazon Prime, you could potentially save on the following:

  • Video streaming: Without Prime, Amazon’s video streaming service is $8.99 per month, or $107.88 per year.
  • Prime reading: If you borrow one Kindle book per month, with an average price of $12.99, you can save $155.88 per year.
  • Music streaming: Considering competitor music streaming services like Spotify and Apple Music charge $9.99 per month, the included music streaming service can potentially save you close to $120 per year.

Amazon Prime’s other discounts and perks depend on what you purchase and how often. For example, Prime members do enjoy a 5% discount at Whole Foods, which can add up if you shop there regularly, but doesn’t provide much benefit if you don’t. Ultimately, you need to compare the discounts, and take into account the convenience of having items delivered, to determine the actual value to your wallet.

Alternatives to Amazon Prime

Amazon Prime offers one-stop shopping for nearly all of your needs, from groceries to entertainment. However, other services do offer similar benefits, and if you only need one or two of them, they could prove to be a better value.

For example, shopping in-store at traditional retailers eliminates all shipping charges, and you may find lower prices on some items than online. If you want the convenience of shopping online and delivery, using a service like Instacart is also an option. Instacart will deliver groceries and items from other stores (such as CVS or Petco) for a flat fee per order; often, that fee will be waived if you purchase certain products or are eligible for a promotion.

Amazon is also far from the only option in terms of streaming content. Other streaming music services, like Spotify, have much larger song libraries than Amazon, and might be a better option for some users.

And unless the Prime Video options meet all of your needs, it’s likely you will be subscribing to another streaming service (like Netflix or Hulu) to have access to all of your favorite programs and movies.

And of course, other apps, including photo printing services like Snapfish and Shutterfly, offer free photo storage, and there’s always your local public library for free books and magazines.

Final Verdict

Amazon Prime shipping is the biggest draw for most Prime members, and if you spend more than $119 on shipping from Amazon annually, then a membership is worthwhile, especially given the other benefits you get from membership. However, if you only order from the retailer occasionally, and don’t mind waiting a bit longer for your items to arrive, you will likely see greater value by subscribing to the specific services that you will use.


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