Amazon.com Inc is raising the price of its annual U.S. Prime subscriptions by 17%.
Amazon raised the price to shoulder higher costs for shipping and wages it sees persisting this year.
Shares rose as much as 17% in extended trade as Amazon also beat profit expectations for the holiday season.
For the holiday quarter, Amazon earned $14.3 billion, double its net income from a year earlier.
On the heels of a windfall from greater at-home shopping in the pandemic, Amazon has poured money into its operations to manage disruptions, most recently the Omicron variant of COVID-19.
Amazon as also spent on signing bonuses to attract hundreds of thousands of workers in a tight labor market, and it has paid more for shipping because it could not get products into the right warehouses.
Now, Amazon is raising the price of Prime. U.S. monthly fees for the fast-shipping and media service are increasing to $14.99 from $12.99, and annual membership is going up to $139, from $119.
The change is effective Feb. 18 for new members and reflects greater benefits such as savings on prescription drugs and faster delivery, Amazon said.
Offsetting softer e-commerce trends, key cloud unit Amazon Web Services (AWS) performed better than expected.
With demand rising for gaming and remote work during the pandemic, AWS posted a 40% increase in revenue to $17.8 billion.
Analysts had expected more than $17.3 billion, according to IBES data from Refinitiv.
The unit even won a key customer, announcing Thursday an expanded partnership with retailer Best Buy Co Inc.
Amazon also broke out ad revenue for the first time, reporting a 32% increase to $9.7 billion for the fourth quarter. That’s bigger than the ad sales Alphabet’s YouTube reported for the same period.
Still, Amazon forecast first-quarter sales below Wall Street estimates, projecting between $112 billion and $117 billion, or to grow between 3% and 8%.
Analysts were expecting about $120 billion, according to IBES data from Refinitiv.