Amazon’s drone delivery will cost the company $63 per drop

Amazon’s long-awaited drone delivery service, Prime Air, will cost a huge $63 per package in 2025, according to internal projections viewed by Business Insider.

Currently, the estimated cost of sending a parcel for Amazon is around $4.50 to $5.50 per package when shipping through third-party delivery partners, according to Wells Fargo’s Brian Fitzgerald.

If Amazon sends a parcel through its own logistics network it costs roughly $3.47 per package, according to estimates from supply chain consulting firm MWPVL International.

Amazon drone delivery
READ MORE: Amazon plans to deliver 500 million packages a year via drones

The deliveries, which Amazon expects to be free of charge for subscribers of its Prime customers, will deliver from 32 locations by 2025, according to internal documents.

Amazon has been quietly testing the Prime Air service in a small number of rural areas in Oregon and California over the past 18 months.

It hopes to test the service with 1,300 shoppers this year.

The nature of the Prime Air service has always been costly, however Amazon is confident that it will be able to strip back the cost as it adds more locations and drops to more customers.

“As we advance through the Product Roadmap, we will continue to refine our [Cost per Package] model to inform our design efforts and optimise our cost structure,” one of the documents shared with Business Insider said.

The current generation of drone it uses for Prime Air costs approximately $146,000 to build, however the company plans to cut costs by over half of that to $60,000 for its next generation vehicle.

The newer model may also be able to triple the flying range of its predecessor, from 5km to 15km.

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