Tips for managing subscription price increases

This week Netflix debuted a new pricing scheme, which will see the cost of its mid-tier plan go up by $1 from $9.99 to $10.99 a month. Its top-tier “premium” plan will now cost $13.99 a month, a $2 increase over its previous price tag of $11.99. The bottom-tier “basic” plan is unchanged at $7.99 a month. 

Last week I was at the Zuora Subscribed London event listening to the experts from Simon and Kucher talk about pricing strategies. Here are some of their tips for managing an effective price increase:

• Don't do a flat price increase across the board, A uniform price increase is almost never the optimal strategy - rather, do targeted price increases.
• Don't make the price rise the headline - time it with good news and focus on the category growth story. In July, Netflix announced it had earmarked $6bn to spend on content this year. 
• Have a clear rationale for the increase.  Increased costs, such as rising oil prices is not a valid reason. If you use cost increases to argue for a price increase, are you prepared to bring the price down when commodity prices go back down?
• Be prepared for deal-chasers and brief customer-facing teams on how to counter objections. 
• Prepare for a short-term volume dip. If you can stomach the dips you will enjoy a much greater chance of getting the price increase to stick.

Incidentally, after the price changes were revealed, Netflix shares rose 4.25 per cent to $192.29, putting them on track for their best one-day gain since July.

https://www.ft.com/content/10ec51db-104d-37c6-8161-cc704d9a18f6