Amazon PrimeIf you are launching paid (or premium) memberships on your community – or if you have them already – I’d encourage you to take a good, hard look at how Amazon has treated Amazon Prime. Especially when it comes to pricing and how they add new features to the program.

As a point of disclosure, I am both a Prime member and an Amazon shareholder.

The History of Amazon Prime in the U.S.

On February 2, 2005, Amazon Prime launched. It was priced at $79 a year, and the benefits were completely tied to shipping. Free two-day shipping on items sold directly by Amazon, as well as discounted one-day shipping, for up to 4 members of your household. Give or take, the shipping benefits have pretty much stayed the same over the years. But not much else has.

On February 22, 2011, they launched Prime Instant Video, a streaming library of more than 5,000 movies and TV shows, included with your Prime membership. The price remained $79. Amazon has steadily improved the Prime video library with deal after deal. It is now more than 40,000 titles strong, including various exclusives (like Downton Abbey) and original programming that Amazon develops in-house.

The Kindle Owners’ Lending Library was added to Prime on November 2, 2011. This program allowed members to borrow one book per month for free from a library of more than 5,000 titles. Once again, the price of Prime did not increase. Amazon has continued to add to the Lending Library: it now contains more than 600,000 eligible books.

In September of 2013, Amazon released the latest line of their Kindle Fire tablets. On those devices, Prime members were now able to download more than half of the streaming video library for offline viewing – something you can’t do on similar services, including Netflix. Nonetheless, the price of Prime was not raised.

Amazon launched Kindle First on November 1, 2013. Yet another program for Prime members only, this one provides one free book a month (which you then own permanently), from a handful of titles selected by Amazon. You are probably sensing a trend here, but the price of Prime did not go up.

The Price Goes Up! (and Prime Music)

It wasn’t until mid-March of 2014 that Amazon announced the price of Prime would increase. How much would it increase after all of those additions? Just $20, to $99, effective on April 17. More than 7 years after Prime itself launched.

And, oh yeah, on June 12, they launched Prime Music, a streaming music service with more than 1 million songs that has already expanded. Of course, the price of Prime was not raised.

With the history lesson out of the way, here are the big things I want you to take away from how Amazon has positioned Prime.

Don’t Tie Surprise Additions to Price Increases

Amazon has never announced a new, surprise bonus to Prime and said, in the same breath, that “oh yeah, you’ll also be paying us more.” Never. This may seem odd. After all, when you add new stuff to the package, that’s the perfect time to hit people up for more money, right? Actually, no, this is genius.

It allows Amazon to surprise members without a downside. There is no complaint from current members, “well, that’s nice, but it’s going to cost you.” They don’t create a situation where they are saying “we’ll only give you more if you pay us more.” You simply receive it because you are a valued member of Prime. This strategy demonstrates that Amazon appreciates Prime members and is committed to enhancing the program.

By opting to do so, instead of nickel and diming people with small up-charges, they have built a tremendously loyal group of customers.

Pick a Price You Can Keep (and Your Members Will Defend Your Price Increases When You Over-Deliver)

Roping members in with a low, low introductory rate might sound good, but a lot of people will just look at it as a bait and switch. Even if you communicate up front that the rate will charge, it can still breed distrust. Amazon selected a price they could live with – and they didn’t change it for more than 7 years. Meanwhile, they added so much value to the program.

When they did actually decide to raise prices, they kept it to a reasonable amount, and many Amazon Prime members defended it. Including me! I felt it was a bargain at $79 when it was just shipping. I was blown away when they added streaming video and the library grew. The other add-ons were just crazy. And they didn’t ask me for more money? Of course they can raise the price by $20. They have given me so much more than I anticipated. They have over-delivered. They made the price increase count.

Prime Members Spend More Than Non-Prime Members

Though the official numbers are not released by Amazon, it is estimated that Prime members spend twice as much money as non-Prime members. In other words, those who participate in the Prime program, which is now into the tens of millions, are Amazon’s best customers. Similar to how your  paid members will, on average, be more deeply invested in your community than members who do not pay.

Amazon has shown you the way. Over-deliver. Don’t tie price increases to new offerings. Pick a price you can stick with, and make price increases count. Treat your paid members as well as Amazon treats theirs.