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The Prime membership is sunk cost, no doubt.

But once you've paid it, any given purchase is "should I drive down to the store to get it, Amazon it for 'free', or pay some other retailer for online shipping?". And at that point, the Amazon choice wins more often than not.

And while amazon does incorporate the price of 'free' shipping into their base (I often see, ON AMAZON, the same item from a non-prime-eligible vendor for $4 less than prime elligible), I know that when I order something with prime shipping, it gets there within 2 days at most, and has a hassle free return policy.

So really, the $80 serves too reasons: To defray some of amazon's costs, and to weed out serious buyers from non serious buyers -- they'll lose money on "free shipping" for people who only buy 5 items a year, so they pick a price point which is a no-brainer for anyone whom won't be a losing customer for them.

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