The Behavioral Psychology of Netflix’s Plan to Charge Higher Prices

The Atlantic:

Netflix is crushing it. But now, the company untying cable’s $60 billion stranglehold on American TV is apparently trying to accomplish something simple—something it hasn’t done in more than two years in the U.S.

It’s trying to raise prices.

Netflix costs $7.99 per month. Last year, it cost $7.99 per month. The year before that, it cost $7.99 per month. While cable and Internet costs has grown inexorably, the inflation-adjusted price of Netflix has actually fallen in the last three years. And its executive is starting to think three years is enough.

“It’s not clear that one price fits all,” CEO Reed Hastings said last week, discussing an experiment in Ireland to raise prices for new customers by one euro to €7.99 ($10.94) per month.

In the early 1980s, Joel Huber and Christopher Puto at Duke University offered their students four varieties of beer (super-bargain, bargain, premium, and super-premium)—in three separate experiments.

Read the whole story: The Atlantic

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