Reality Check: Netflix WILL Raise the Price of Membership
"Netflix’s pricing strategies are bound by the same laws of supply and demand that affect every other commercial entity’s rates, and Netflix likely felt compelled to raise prices due to mounting pressure from several directions.
Determining the proper price increase is a delicate balancing act to find the sweet spot between company needs and customer tolerances. By one estimate, Netflix’s price hike could bring in $600 million to $1 billion over the next two years. Given the various (and constantly evolving) pressures of the streaming content industry, it is fascinating to see whether Netflix’s new price point is high enough to turn a profit in the face of rising costs" (Caporaso).
Determining the proper price increase is a delicate balancing act to find the sweet spot between company needs and customer tolerances. By one estimate, Netflix’s price hike could bring in $600 million to $1 billion over the next two years. Given the various (and constantly evolving) pressures of the streaming content industry, it is fascinating to see whether Netflix’s new price point is high enough to turn a profit in the face of rising costs" (Caporaso).
This graph shows some very important information. This graph proves that the demand and supply curve of Netflix is currently off balance. The equilibrium price would allow for Netflix to raise their membership price significantly.