The video streaming company Netflix, Inc. (NASDAQ: NFLX) could be facing a drastic customer loss because users are unaware of the company’s price adjustments to the standard Netflix accounts. Until recently, the video streaming company has made its preferred customers happy, as their streaming plan wasn’t raised when new subscribers did pay 1$ more for the service.
Even though new subscribers used to pay $8.99 monthly fee, which was increased last year to $9.99, preferred subscribers had a $7.99 monthly fee in exchange for a two-stream HD quality plan. Still, the vast majority of Netflix binge-watchers are currently unaware of the streaming service company plans to increase all fees to $9.99 regardless if the customer has been with Netflix since its beginnings or not.
This would implicate a major loss to the client base, according to a research from JP Morgan. The results of that research showed an 80 percent of clients who don’t know the company will request all users for the complete fee to be paid by next month in order to keep their subscription to Netflix.
Interestingly enough, the same research also showed a 15 percent of users that will cancel their subscription due to the price changes. Considering that Netflix’s customer base revolves around the 17 million users across the world, 15 percent could hit the company hard when it comes to revenue per year.
The crucial problem with Netflix’s $2 raise on their monthly fees for high-quality video streaming service is not the price itself, but the lack of information provided to its users. One thing is announcing a price adjustment of a couple bucks per month, but letting this information slide from their customer’s attention is an entirely different one.
A rookie mistake
If the price rate goes up, and users only realize it after paying their $7.99 a month and not having the video streaming service, it could mean not only angrily complaints to Netflix’s customer service, but also the loss of valuable customers. Without mentioning the damage to Netflix reputation as one of the leaders in the video streaming service marketplace.
Considering that Netflix spent almost half a year providing high-quality video streaming service at the low cost of $7.99 for preferred customers, the extra $2 shouldn’t make too many people cancel their subscription. After all, there’s nothing better on a Sunday that spent all day binge-watching whatever series Netflix has to offer.
Two more dollars a month could be worth it even if the company doesn’t announce the price adjustment, considering that the video streaming company has plans to introduce new features to its platform later this year.
Source: Business Insider