Rising Netflix prices



Netflix recently announced that they were raising their monthly cost in January and explained that the reason for doing so was in order to help them add more shows and movies. For each user, the price is only rising by $1 or $2 meaning that per year, it's about an $18 increase. However, with Netflix's 148 million users, this adds a $2.5 billion increase in revenue helping them pay for their new shows and movies, as well as their $8 billion budget for their original content. 

Image result for netflix raising prices


At the beginning of the year, we analyzed different services we spend money on and how a price change would change how much we consumed that service. Majority of the class had Netflix as one of there and as it was a monthly fee, it took a big price change for us to stop consuming it, part of the reason was probably also that most of us don't pay the fee but our parents or friends pay. 

Netflix strategy of increasing their subscription by only a few dollars every so often, it allows them to be so successful because they are finding loyal customers that will stay with them as the price changes. If Netflix were to try and increase their price by $5 per month, they would most likely lose customers to other services like Hulu and Amazon Prime but with the small increase, they find loyal customers that stay with them. 

Source: https://www.cnn.com/2019/04/02/tech/netflix-price-increase-email-trnd/index.html





Comments

  1. AnonymousApril 25, 2019 at 6:43 PM

    Netflix constantly hiking up their prices makes me think of the Foot-in-the-door technique, where companies get you hooked onto their product/service with a good deal. Netflix, began with faily low prices for practically same service they have today. They were able to amass a huge user base, 148 million users as you said, and now they are utterly dependent on Netflix. At least in the Silicon Valley, it's hard to find anyone that doesn't have Netflix.

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