According to reports, Netflix has once again raised its monthly subscription fees in the United States and Canada. This price increase is the third time Netflix has raised prices in the United States in the past three years. Currently, Netflix’s top service is 42% more expensive than it was at the end of 2018.
The monthly fee for the basic plan has risen by $1 to $9.99, the standard plan has risen from $13.99 to $15.49, and the premium service plan has risen from $17.99 to $19.99, according to Netflix. Shares of Netflix have fallen 25% over the past two months amid market volatility.
But the company’s stock rose 1.25% on news of the price increase, perhaps because the price hike will boost Netflix’s revenue in the near term. Assuming the price move is limited to the U.S., it would add more than $1 billion a year to the company’s revenue.
Wall Street has been hoping Netflix will raise prices as subscriber growth slows. Netflix’s price hike also reflects the company’s belief that its service is embedded in customers’ lives and won’t lose customers because of price increases.
However, it is not yet known how many members will cancel the booking due to this price increase. The $20 price point is the upper limit of what many are willing to pay for Netflix, according to research done on Netflix customers by ProfitWell, a software company that works with subscription services. Still, ProfitWell chief executive Patrick Campbell said the company wouldn’t lose too much, given that Netflix had $9.99 and $15.49 remaining. But raising prices is a risky move. Cable has suffered over the past decade, and if the price is too high, people will turn it off.
Netflix led the way for cable subscribers to unsubscribe 12 years ago when cheaper streaming services came out. Today, there are many alternatives to Netflix in the streaming space, such as Amazon Prime Video, Hulu, Disney+, Apple TV+, Peacock, Discovery+, and largely rely on lower prices.