Have you heard about Netflix’s plan to increase their prices on a segment of customers who were getting the best of two services for a really great price. It’s kind of old news by now, but here’s the background: Right now, Netflix subscribers can get unlimited streaming and unlimited DVDs (one at a time) for $10 per month. Starting September 1, that same plan will cost $16. Customers are irate at the 60% price increase. We don’t necessarily want irate customers, but we can learn some things from Netflix’s approach.
Netflix isn’t grandfathering customers who are currently on a plan.
Often businesses allow current customers to keep their current service plan at the same price and only require new customers to get the new price. Netflix isn’t giving this option. Customers have to either pay more for their same service or pick another, possibly cheaper option.
Lots of freelancers choose to keep current clients at the same pricing when they increase rates, but it isn’t always a good financial decision. It may not be profitable to keep writing at $.10/word for some clients while your new clients pay you $.15/word. Many clients who like your work will pay the extra price. Some may leave (that could be what you want), but that gives you the opportunity to find clients who’ll pay your rate.
Customers now have to pay for the benefits they’re getting.
A couple years ago, I started having requests for images in addition to content. It didn’t sound like a huge request until I started searching for images that met client specifications. It can take almost as much time to find an image as it does to create content. When image searching – and other extras like social promotion – begins to take a considerable about of time, include it in your pricing.
Because it’s can be bad business to start charging customers for something they used to get for free, try to price things correctly from the beginning. If you have to alter your pricing mid-project, give clients advance notice and options. For example, “Starting September 1, image searches will cost an additional $15. You can continue receiving content at the regular rate of $75/article.” These types of changes may require you to redo your contract if you have one.
Continually review pricing.
It was only about 9 months ago that Netflix introduced the streaming only option and they’ve already realized they’ll make more money by switching up the plans and prices. At least twice a year, review your current pricing and confirm your rates are at the right level. For example, you may increase your rates if you experience a cost of living increase or if you receive a certification that makes you more qualified in your niche.