NetFlix Fail: Double Your Prices and Nobody Will Complain

That is the advice of many of the big gurus. They always tell you that your pricing is not high enough and you need to double if not triple your prices. That way you will make more money and the vast majority of your customers won’t say a thing.

Has this sage advice by our guru clan actually correct?

For example, just look at what happened to Netflix after they doubled their subscription prices. They went through a mass unsubscribe rate and their stock price got the hammer… hard!

What are the real pricing lessons that you should take from this and apply in your business?

1. Never Double Pricing After Building Up A Huge Base

This is Netflix’s biggest problem. They built a monster following that was exponentially growing. I was part of that mass customer base and even though the majority of their streaming movies sucked, I remained a subscriber.

However, they raised prices with no reason given and they doubled them which seemed to me very excessive. Plus there was not new service given for that increase.

2. No New Value For The Given For Price Increase

You can’t just give a price increase without a good reason and if you are going to double prices, you better bring more value to the table.

When you don’t do either of those things, it just looks like it’s done of greed purposes.

3. Never Double Subscription Pricing

You can probably easily get away with doubling pricing on a product. However, subscription pricing is hard to double. That is a huge increase over the course of 6 months to a year.

That is really unfair to do to your customer base and it makes them feel like suckers.

My Bottom Line Pricing Rule

Be more than fair and try to charge as little as you can, but don’t forget to test. I always try to charge as little as I can and I always give a great reason as to why I do this. This has never backfired on me and only won me favor of customers.

You should test your pricing though because there is a price that might work best. You can use split testing to do this.

Remember that whatever you do with your business or your website, you need to give reasons and good reasons as to why things are happening. Never keep your customers in the dark.

Netflix might have told their customers in their official statement but I remember reading it and seeing no reasons. And if you ask most people, they will probably give an answer having something to do with greed.

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