Sunday, April 29, 2018

Amazon Prime: Is it worth it?

Amazon just announced that the price for a yearly subscription to Amazon Prime is being raised to $120. With that in mind, I decided to do some rough math to see if Prime was still worth it for my wife and I.

We do order quite a bit of stuff from Amazon, on things like "dog stuff" (food, treats, bedding, etc.), consumer electronics and accessories (iPhone/iPad cases, Chromebooks, headphones), clothes, and even coffee.

First consideration: I don't consider Prime Video much of a benefit. Maybe I should reconsider that, but that's where I am at today. A friend says she uses Prime Video in lieu of Netflix. But, Netflix has all the Marvel TV shows and I'm really into those. Amazon doesn't have those. In fact, all I've really been excited about on Amazon Prime video is Bosch, the cop show based on the books of Michael Connelly. It's quite good, but it alone might not be enough to make me pay $120/year.

Second consideration: Two-day shipping is nice, but if I could save money, I'd settle for slower shipping. Even without Prime, any purchase of $25+ gets you free shipping. Just not two-day shipping. (And sometimes the two day shipping really means three or four day shipping. And a number of smaller products are "add-ons" which means you can't buy them unless your order as a minimum of $25 in non-"add-on" things first. Both of these poke holes in the myth of "get anything delivered in two days.")

Third consideration: We've signed up for the Amazon Store Credit Card. Since we have Amazon Prime, that gets us 5% off all (or most?) purchases. So the question becomes, do we still end up net ahead even after it comes time for us to pay $120 for the next year of Amazon Prime?

I reviewed the last twelve months of Amazon store card statements to see how much we've spent. That totals up to about $4793. Let's assume that is after the 5% savings, so for calculation's sake, let's bump that up to $5046. Five percent back on that would be about $252. We've paid $100 for the year of Prime, so that means that we've saved about $152. If we had paid $120 for a year of Amazon Prime, that would have reduced our savings to $132. Either way, for now, that's still money ahead.

Verdict: We're keeping Amazon Prime. Even with the price hike, it's still advantageous for my wife and I to continue to pay for and utilize Amazon Prime, assuming our purchasing patterns stay the same, or if we increase our Amazon spend. If our Amazon spend is going to decrease, it may not be worth it. We would basically have to spend $2400 on Amazon in a year to make Prime "pay for itself" in this way, and we'd have to spend more than that to get more than $120 back in a year.

Assuming I got the math right. I could be off by a hair, if the Prime card doesn't get you 5% off of every single thing. I try not to buy from non-Amazon vendors through their platform, so that might minimize the chances of that.

Pay your bill: If you don't pay your Amazon Store Credit Card bill off in full every month, all bets are off. This card has a 27% Annual Percentage Rate (APR) which is crazy high. This would eat up any 5% savings you'd be getting. If you need to buy things on credit from Amazon, use your lowest interest rate regular credit card.

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