How Amazon generated $2 billion of additional revenue in 1 year without raising prices

Amazon logo showing on a phone

There are good ways and bad ways to communicate changes to your pricing or service. This is an example of a well managed one from Amazon in January 2024 that you may well have received yourself.

Lets break it down,

Start of email from Amazon about change to service
price change notice from Amazon prime

They make it clear what the change is and why they are making it. They stress the value early on in terms of how it will enable them to continue investing in their content.

They also play down the negative impact of this change on customers by comparing how they will have fewer ads compared to other streaming platforms.

They also provide the upsell option where you can keep your existing service and remove the new ads by paying an additional £2.99 a month.

Next they reinforce the value and everything that you get in the service to remind you just how good it is,

Middle part of a price increase letter from Amazon about their Prime service which highlights the services you get bundled into the package.
Amazon Prime service notice, highlighting the great value

And finally they wrap it up with the following,

Final part of an Amazon Prime service change email sent to all customers.

They clarify that there is no action required and also give another gentle push towards their ad free additional subscription.

They made this change in January 2024 and in that year alone they generated over $2 billion in Prime Video related revenue.

Amazon knew that their customers (including myself) might not be happy about the ads but they also knew that customers love the convenience of next day deliveries and all the other parts of the Prime service.

This meant that they had very little risk of losing a significant percentage of customers and any losses would easily be offset by the increased revenue.

They also provided an upsell to at least give those customers who are really upset about the ads a way to avoid them, albeit at an additional cost.

The reality is that Amazon were actually degrading the customer experience to develop a new revenue stream. They way they positioned it though was extremely well done and by focusing on the value they are delivering they avoided any significant customer push-back.

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