Latest Netflix Price Increase – A Customer’s Perspective

Netflix thumbs up

A good friend sent the following email:

Here is a blog subject for you. You can comment on this pricing strategy. I think it is great. First, I believe Netflix is the greatest value product I purchase. Therefore, I do not mind paying $10/month. Second by charging new customers $2 more than me for last 2 years it makes me feel like I was rewarded for being a loyal customer.
I have not heard any big clamor about this price increase like I heard ~4 yrs ago when the CEO had to apologize.
Your thoughts?
– SW

Here is the text Netflix sent to SW:

Dear SW,
When we raised prices for new Netflix members in 2014, we kept your price the same for two years. Your special pricing is now ending and as of 8/1/16 your new price will be $9.99 per month.
Please visit to review the details of this change and your options for plans and prices.
As always, if you have questions, we are happy to help. Please visit the Help Center for more information.
–The Netflix Team

Once again Netflix got it right!  After their huge pricing fiasco in 2011, they have learned their lesson and are being more considerate of their customers.  We wrote about the first Netflix price increase back in 2011 and about the beginning of this new price increase back in 2014.  Above we see an unsolicited opinion from one of their customers.

Here’s the big lesson.  When you are going to raise prices on your current customers, try to do something nice for them to make them feel special.  In this case, Netflix held the price for 2 years.  I usually recommend 6 months, but as you can see from this one anecdote, the approach Netflix took this time seemed to work.

It’s too early to see if this dramatically increases the number of customers who unsubscribe.  This time they are phasing in these price increases so they can certainly see any impact on a subset of customers so they can correct course quickly if needed.  Another smart move.

One last reminder on price increases.  Notice that SW above said “I believe Netflix is the greatest value product I purchase. Therefore, I do not mind paying $10/month.”  What’s important about this statement is that he reconsidered whether or not Netflix was worth the new price.  He made a new decision whether or not to continue purchasing. If Netflix hadn’t increased their price, he likely would not have even thought about whether or not to continue.  When we raise prices on our current subscribers, we invite them to rethink their decision.

As Netflix demonstrates, price increases are possible.  You just need to implement them thoughtfully.



Mark Stiving

Mark Stiving

Mark Stiving is chief pricing educator with Impact Pricing LLC. Connect with him on LinkedIn

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