Welcome to the Impact Pricing Memecast, where I take one of our daily names and provide a little bit more insight behind the words.
Think about Netflix for a second. My guess is if you’re a Netflix subscriber or Hulu or wherever you get your video, you probably pay the bill every month, and you rarely ask yourself, should I stay with Netflix or not?
And yet, what do you think happens? When Netflix announces $1 a month price increase? You suddenly ask yourself?
Is Netflix really worth it? Am I getting the value? Now it’s not to say that it’s not worth another dollar. But it’s to say that you rethink the decision. Were prior to them raising the price.
“When you raise prices on your current subscribers, you cause them to rethink their decision. Be careful.”
– Mark Stiving
You never even thought about that decision.
Now, if you’re anything like me, in my old days, I used to pay for a gym membership. And one of the things I found is even though I paid for a gym membership, I rarely went to the gym, I certainly did not get my money’s worth.
And yet, if they never raise prices, I just keep paying the bill. Don’t even think about it, because it’s a decision that I had already made someday in the past.
But imagine what happens the day they say, “Hey, we’re gonna raise your prices.”
Oh, now I have to say, you know, “I’m not really using it that much. I’m not getting my value out of it.”
I think I’ll go ahead and unsubscribe or cancel my membership. In other words, when we raise prices on people who are subscribing, we forced them to rethink their purchase decision, where they’re not going to rethink it regularly.
Probably not a bad situation. In fact, in many times in subscription businesses, we have the opportunity to raise prices, because we’re delivering so much value to our customers. But what about those customers we’re not delivering a lot of value to maybe it makes sense to not raise prices on them.
We hope you enjoyed this memecast. If you see any of our memes that you’d like to move to the top of our memecast list, please let me know. If you have any feedback, definitely send it. You can reach me at [email protected]. Now, go make an impact.
Connect with Mark Stiving:Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy