Netflix Increases Prices

Last week, Netflix announced a $1-$2 monthly price increase for its standard and premium plans. Investors applauded the move, with shares lifting 5.4%[1] on October 6th, adding over $4B to Netflix’ market cap. How many other executives are now evaluating their pricing decisions in search of incremental revenue? Should you? Economists might answer that question by examining the price elasticity… Read More

As a pricing professional, I always love to quote the study that a 1% improvement in price leads to 11% in operating profit, whereas a 1% increase in volume sold improves only by 3.3%[1]. If the business case for managing and improving price is so apparent, why don’t more companies do it? There are multiple factors why a price improvement… Read More

Pricing impact on profitability

  In a recent HBR article, “Linear Thinking in a Non-Linear World,” the authors explain how our minds are naturally biased to assume every relationship between two variables is linear. We are trained to think that the impact on Y with a change in x will be in a fixed/constant proportion. Often, this is not the case and can lead… Read More