Is Amazon Prime’s $99 Annual Fee Worth it? It Depends (AMZN)

With more than 64 million people paying $99 a year for Prime membership with Amazon.com Inc.

Amazon.com Inc AMZN 967.99 + 1.16% ), this would appear to be a good deal. However, for the other 50 million-plus Amazon shoppers asking the question “Is Amazon Prime worth it?” the answer depends on how much they think they can benefit from the long list of Prime perks.

The Value of Free Shipping

Initially, the major draw for Prime membership was the free shipping, which was a good enough reason for many Amazon shoppers who joined. Considering that the average amount spent by Prime shoppers is $1,200 versus about $500 for nonmembers, the savings on shipping costs may be more than enough to justify the membership fee. The big difference could be attributed to the free shipping Amazon members get on most purchases, which others do not. However, if nonmembers buy an average of one item a month from Amazon, paying an average of $12 for two-day shipping, Prime membership would be worth the cost. Even for an average shipping cost of $6 for five-day shipping, the cost of membership may be worth it if at least 16 items are purchased during the year. For more patient shoppers who don’t think they will make that many purchases, Amazon does offer free Super Saver shipping on many items when the total purchase is at least $35 with a five-to-eight-day delivery.

When You Need It Now

For diehard shoppers who can’t wait for free two-day shipping, Amazon Prime has added additional shipping perks, including free same-day delivery in some areas on eligible items. Amazon also offers free one-hour delivery on some items in some areas through Amazon Prime Now. Members can always upgrade to one-day shipping for as little as $2.99 per item.

The Rest of Amazon Prime’s Benefits

With the likes of Wal-Mart Stores Inc. (NYSE: WMT

Wal-Mart Stores Inc WMT 80.40 – 0.32%) competing for online shoppers’ business, Amazon has had to continuously add new benefits to sweeten the deal for Prime members, and it seems to be working. How much value Amazon actually adds to the membership depends on the lifestyle habits and preferences of the prospective member. For people who buy music and movies online, those who like to get advanced notice on Amazon deals, those who can benefit from unlimited photo storage and those who enjoy getting free books, there may be added value in addition to the free shipping. However, many of Amazon Prime’s benefits come with some limitations, so a nonmember would have to carefully consider each along with the alternatives.

Free movie and TV streaming: with its Instant Video service, Amazon is aggressively pursuing the streaming video market. Like Netflix Inc. (NASDAQ: NFLX

Netflix Inc NFLX 171.40 + 1.34% ), Amazon offers its own lineup of original content, including television shows and movies. The major benefit Amazon offers is the ability to download movies and television shows for viewing offline. Amazon also added Showtime, Starz and other streaming services to its menu, though there could be additional monthly charges for individual subscription to these services. In comparison, Netflix costs around $95 a year for its own content and add-on services.

Free music streaming: members also have access to Prime Music, which offers advertisement-free access to more than a million songs. The song library may not be nearly as big as other popular music streaming services, but nonetheless, this service is included in the membership.

Free books: prime members have access to Amazon’s Lending Library, which allows them to check out one book per month. With more than 500,000 titles, there should be enough to satisfy most people’s tastes. There is also Amazon’s Kindle First, which offers members the opportunity to choose from four new books for a free download each month.

Free photo storage: Amazon Prime Photo offers members free unlimited photo storage with automatic uploading from a smartphone or camera.

Free Trial and Other Ways to Pay

Amazon offers a free 30-day Prime membership trial, which may be enough time to try some of the services. If not, Amazon now allows for monthly payments of $10.99, but that adds $32 to the cost. However, members can cancel at any time. Amazon offers college students a six-month free trial, after which they pay just $49 annually.

For people who shop regularly on Amazon, the free shipping is still the main draw for Prime membership. However, the additional perks add enough value for just about anyone to feel they are getting a good deal.