Netflix May Change Its Prices

The company says existing customers won’t bear much of the burden when new pricing rolls out. We’ll see.

Are you still a fan of Netflix? If so, then you should know that the online video service is considering changing prices, establishing “good, better, best” tiers and mulling new streaming combinations (beyond its current $7.99-per-month fee) for new members, reports Bloomberg Businessweek.

If you’re feeling a bit anxious about those proposed changes, you’re likely not alone. Just three years ago, the company’s announcement of a price increase and separation of its video and DVD services lost it about 800,000 subscribers in a quarter and tanked its stock, according to ABC News and other sources.

But don’t hit the cancel button for Netflix just yet.

Netflix said in a recent letter to shareholders:

If we do make pricing changes for new members, existing members would get generous grandfathering of their existing plans and prices, so there would be no material near-term revenue increase from moving to this potential broader set of options. We are in no rush to implement such new member plans and are still researching the best way to proceed.

You might wonder why the company is considering these changes now.

Well, it’s popular. You might still remember the sting of the 2011 missteps, but plenty of others apparently don’t. More than 2.3 million U.S. households signed up for the streaming service in the fourth quarter of 2013 and stocks rose 16 percent, reports CNNMoney.

Also, tier pricing is just smart business, reports Bloomberg Businessweek.

Over time, a pricing strategy without different tiers can curb a company’s financial upside, which is why most merchants have landed on a model geared toward selling products and services at budget, middle, and upscale levels. Restaurants typically find that their least- and most-expensive wines are vastly outsold by the middle-tier offerings — no one wants to appear a cheapskate or foolish spendthrift.

So prepare for some future Netflix announcements but remember –– at least this time you’ve been warned.

Stacy Johnson

It's not the usual blah, blah, blah

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  • Cheryl

    Sure glad I read this. Was thinking of reinstating my Netflix subscription soon, but nah…screw me once, shame on you; screw me twice, shame on me.

  • Y2KJillian

    Ah, We just love Netflix. The price is already such a deal, beyond anything we’ve found…yes, Hulu and others are viewable on my monitor, but I don’t want to sit watching a show on the monitor. It’s bad enough I’m on here half the day anyway doing monitor stuff. AND…we apparently didn’t watch much TV before, so many shows are new to us, and movies? Incredibly many to choose from, both streaming and disks. We used to be with Comcast and other rooftop receiving services; at up to $100 a month and with all kinds of dodgy practices, we decided never again and were in the process of getting an antenna and resigning ourselves to commercials forever, when we were given Netflix for a year as a gift, and the giver set us all up. I will never go back unless I have to. This has been the best three years ever, even with the price hike of — 2011? — the biggest problem to ME then was the proposed change to TWO sites to mess with instead of one. I LOVE just using the one, and even at double the price it is still a total deal compared to Dish and Comcast which suck.
    Then again, remember when you had all of three channels to choose from? I sure do, and all of them stopped in the middle of the night and gave you a flag, the anthem, and then a lovely test pattern!
    Way better now!

  • Johns.Opinion

    I left Netflix, one of those 800,000. Good deal no. I now use Redbox can’t beat the price to rent a few movies a month. Redbox is also coming out with a plan, 4 rental and streaming.

  • MalcomT

    Quantify “near term.”

  • transmitterguy

    $7.99 a month is almost free! It costs me more to eat at McDonalds just once, my daughter uses it at college, my son watches it every day at home, my wife watches movies on it. love it!

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