I'd say there are four ways to price a product or a service. Through its production cost, the value customers think it has, competition and experimental pricing. From there you also need to understand what Amazon Prime's goal is. According to Amazon, Prime gives access to all the benefits including FREE Two-Day Shipping for eligible purchases, unlimited streaming of movies and TV shows with Prime Instant Video, and the ability to borrow books from the Kindle Owners' Lending Library. If we make an equation it would be Two-Day Shipping cost + Unlimited streaming cost + Kindle Owners Lending Library cost + Margin. So let's break it down into the following: Two-Day Shipping: We would want to know how much Amazon customers pay to ship their items in average, how many of them want their items to be delivered within two-days and how many orders an average Amazon user make per year. We now should be able to determine a price customer would be willing to pay to Two-Day Shipping. Unlimited streaming: Here, we can align on other TV streaming providers such as Netflix or Hulu which price their annual subscription to $99 but since it's a bundle, we can also estimate the cost of maintaining Amazon servers and the service and divide it by the number of potential Prime users to have an approximate cost. Kindle Owners Lending Library: In this case, we can estimate the value of having access to the Lending Library. We can also estimate its price by multiplying the average price that customers spend on Kindle books by the average number of books purchased by a person in a year on Amazon. Margin: It really depends on your strategy. If you decide that you want the service to be profitable, then you add-up the costs above and add 10 or 15%. You can also decide that you strategy is to attract as many people to Amazon as possible and not have a lower or zero profit margin. Possibilities are of course endless and not restricted to the above.