Value-Based Subscription Price Increase Strategies For Streaming Services 🏊🏻♂️
The subscription price of content streaming services continues to increase. Netflix, Hulu, Disney+, Paramount+, and Apple TV+ have all just announced pricing increases, which means viewers will have to spend more money to continue watching their favourite series and movies. The reality is that this trend isn’t going away anytime soon.
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The problem is though, as subscription prices for streaming services, continue to rise, some people may choose to give up their subscriptions. This could lead to a decrease in customer base and subsequently, revenues. Therefore, streaming platforms must carefully assess the price increase plans to see if customers are still willing to pay for the services offered.
In this series of articles, we will compare streaming services that exclusively own their content with those that license them to other platforms. We look at the issues they are currently facing and why they continue to raise their pricing. Next, will also go over some of the revenue and valuing issues plaguing the music business. We discuss how price increases for subscription services may impact the industry. Then we explain how to navigate the evolving streaming market landscape and efficiently transform their pricing strategies. We argue that simply raising prices will not be enough to sustain profits and growth if customer demand and preferences are not taken into account.
At Taylor Wells, we believe that streaming services should focus on maintaining profitability while satisfying customers through reasonable pricing strategies. By the end, you’ll understand how each type of streaming service can optimise pricing and offerings to ensure long-term commercial profitability.
Table of Contents:
I. Content Streaming Service Subscription Price Increase Trends
II. A Price Increase Strategy For Music Streaming Subscription Services
III. Strategic Subscription Pricing Model For Content Streaming Services
Content Streaming Service Subscription Price Increase Trends
In 2011, a regular Netflix subscription cost $7.99 per month. In 2013, the company launched its $11.99 per month 4K premium membership. Then, Netflix’s costliest plan increased from $11.99 to $13.99 in 2017, while its standard plan went from $9.99 to $10.99. At the time, the streaming service ascribed the increase to additional content and offerings.
The prices rose once again in 2019, bringing the premium price to $15.99, the standard plan to $13.99, and raising the basic option to $8.99. Netflix raised the standard and premium plans by another $2 in 2020. Customers are now paying $19.99 for a premium plan, $15.49 for the standard plan, or $9.99 for a basic subscription.
Netflix is not alone in this price increase trend. In fact, Hulu raised the price of its ad-supported subscription, while newer services such as Disney+, Paramount+, and Apple TV+ have all just raised their subscription prices.
The price of streaming services is reflective of the economic realities and costs that it takes to produce and distribute the content. These costs include maintaining a secure server infrastructure, licensing fees for content, and providing support services for subscribers. The costs of creating and distributing high-quality content are reflected in the price of streaming services.
The problem is that whereas some streamers lose money by paying for content to be featured on their platforms, others lose money by distributing it on their own.
Streaming services that pay for content to be available on their platforms may appear outwardly to have an edge over those who distribute their own content. However, the costs associated with paying for content can quickly add up, and these streaming services are often left losing money in the long run. This is because they have to pay upfront fees for licensing rights, as well as for marketing and advertising campaigns to promote their featured content.
Other streaming services often lose money by distributing their own content to their platforms. This is because the costs associated with producing and marketing the films or shows are typically high. There may be limited opportunities for recouping these costs via subscription revenue. Additionally, streaming services must compete with powerful media firms that can afford large production budgets for their original content. Hence, streaming services may lose money by investing in projects that don’t turn out to be successful or profitable.
Considering current circumstances, streaming subscription services choose to increase their price or adopt advertising to meet the expectations of investors. Some executives may believe they will just have to risk losing members who refuse to pay higher prices along the way. But should this really be the case?
Discussion On Subscription Business Revenue Model And Price Increase Strategy
As the streaming industry evolves, the majority of consumers are already tied to the providers of their choice. According to statistics, 85% of US households have a streaming service subscription. This figure climbed by only 2% year on year, leaving limited possibility for expansion. At present, 68% of Australians use at least one streaming service. Netflix is the most popular streaming service (65%), followed by Disney+ (35%), Prime Video (30%), and Stan (22%).
This signifies that the initial phases of the land grab are nearing their conclusion. We’re approaching the point where service providers have to prove that they have real value to offer to stay in business. As we mentioned previously, content streaming services can be classified into two categories. The first type includes those who have exclusive content and do not license their shows to other platforms. The second category consists of those who license their content to other platforms.
Digital Streaming Services With Exclusive Content
One of the key features of some streaming service models is exclusive content. This means that customers can only access the content directly through that particular streaming service provider.
Netflix
Netflix does not profit from licensing content to other platforms. Netflix’s original programming is exclusive to the service, and the company pays to acquire the rights to other studios’ content for use on its platform. This is one of the main reasons why the service reacted after losing customers for the first time in more than a decade, followed by millions more in the months that came after.
To diversify its revenue sources, the company has since launched an ad-supported tier and is cracking down on password sharing. It also imposed a $17 billion cap on content expenditure for 2023 and the next few years.
Apple TV+
Apple TV+ is in the same boat as Netflix in that it only makes a profit by gaining members and not by licensing out the content it spends money producing. The tech giant, Apple, has recently upped the cost of all of its services, including Apple TV+. While the company hasn’t yet employed ad-supported offers, some analysts believe it will soon.
Digital Streaming Services That Distribute Their Content
Some streaming service models are licensing their content to other platforms, allowing viewers to watch their produced shows on multiple media services. This can open up new markets for streaming services, as they can now tap into audiences that may not have been aware of their service before.
Disney+
The problem is that even if a streaming service makes some additional revenue by licensing content to other platforms, this creates a separate problem that leads to price increases. Consider Disney, which uses a lot of its own content to build out the libraries of Disney+ and Hulu.
Not long ago, Disney paid a $1 billion penalty to terminate an unidentified license arrangement early and obtain the material on its own platform. While Disney did not specify the programming in the issue, others speculate that it has to do with the company recovering Marvel shows previously developed by Netflix, such as Jessica Jones and Daredevil, which are now available on Disney+. Dropping deals like these forces Disney to raise prices to compensate for the loss. And that is just what Disney did.
The price of Disney+ has already increased from $7.99 to $10.99 per month, while the ad-supported Hulu plan has increased from $6.99 to $7.99 per month, with the ad-free version increasing from $12.99 to $14.99 per month. Members of Disney+ have already fallen from 161.8 million to 157.8 million, and the situation will only get worse if the business continues to hike its prices.
Paramount+
Following in the footsteps of its major streaming service competitors, Paramount+ has increased its basic and premium monthly subscription prices from 20% to 40% respectively after adding the Showtime programming suite to the company’s offerings. The ad-supported plan on the streaming platform went up from $4.99 to $5.99 per month, and the premium plan, which includes Showtime, jumped from $9.99 to $11.99.
The platform exclusively stores content such as the majority of the Star Trek franchise and an iCarly reboot, while most of Paramount’s programming is available on other platforms, such as South Park on HBO Max and the popular Yellowstone on NBC Peacock.
How can streaming services deal with the constraints of content production, licensing, and subscription price increase?
Streaming services that don’t license out their content can employ value-based approaches that highlight their exclusive program libraries as a way to differentiate themselves from competitors and retain their subscribers. In addition, they can also use loyalty programs to reward and encourage members to remain subscribed. Featuring exclusive bonus content or creating customised viewing experiences can also be effective strategies.
Streaming services that license out their content to other platforms also have an opportunity to use value-based approaches to address rising distribution costs and the need to increase prices without greatly impacting their subscriber base. By centralising and streamlining processes such as contract negotiation, media rights management, content ingestion, and delivery, streaming services can put together a comprehensive strategy to ensure that their content is securely licensed and delivered on time. This approach also allows them to create a more efficient and cost-effective licensing model, which can help to offset the increase in subscription prices.
Furthermore, utilising data-driven insights to understand user preferences can help streaming services create highly targeted offers and discounts which can further drive up customer loyalty. By taking a value-based approach, streaming services can continue offering high-quality content while still controlling their costs and mitigating the impact of price increases on their subscribers.
Implications Of Value-Based Streaming Services Subscription Price Increase Strategy
Streaming services are facing an ever-evolving landscape of competition and consumer demand. As a result, it is essential that they reassess their pricing strategies and commercial capabilities to remain competitive while increasing their subscription prices. If streaming providers fail to do this, then there is a real risk of losing customers to rival platforms or not being able to monetise their content effectively.
Build a high-performance pricing team. Our findings show that with the right set-up and pricing team in place, incremental earnings gains can begin to occur in less than 12 weeks. After 6 months, the team can capture at least 1.0-3.25% more margin using better price management processes. After 9-12 months, businesses often generate between 7-11% additional margin each year as they identify more complex and previously unrealised opportunities, efficiencies, and risks.
Invest in strengthening commercial capabilities. Creating an agile environment allows streaming services to quickly adapt to changing consumer behaviour with limited risk and cost. By having the right internal structures in place, businesses can stay ahead of the competition, ensuring that customers are provided with an optimal level of service.
Our findings show that when a business builds and embeds commercial capability across the business; bolstering its internal pricing skills and capabilities to build a sustainable pricing system, it can generate at least 3-10% additional margin each year while protecting hard-earned revenue and volume. This is at least a 30-60% profit improvement straight to the bottom line.
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Conclusion
When it comes to streaming services, there are two main types: those with exclusive content and those who license their content to other platforms. Services that offer exclusively created content are limited in the scope of their offerings but provide an audience with a unique experience they won’t find anywhere else. On the other hand, those who opt to license their shows to other platforms can reach a wider audience and potentially gain more revenue. It comes down to the individual streaming service’s choice and what best suits their business model.
Content streaming subscription services need to look beyond simple subscription price increase strategies and assess their pricing strategies more holistically. By introducing better pricing strategies, streaming services can increase their subscription prices while still offering competitive value for money. Moreover, reorganising commercial capabilities within the organisation can help to optimise resources, enabling a higher level of customer insight and better management of revenue streams.
A Price Increase Strategy For Music Streaming Subscription Services
Is the music business undervalued? According to many record labels, yes it is. In fact, users in the United States spend only half as much for each hour of music usage as they do for streaming services for movies and TV shows. Executives also assert that the price of music subscriptions now does not take inflation into consideration. Now they intend to implement a price increase for music streaming subscription services.
The problem is though, raising prices may result in a huge decline in music subscriptions. Once consumers can no longer afford to pay monthly, they are likely to switch back to traditional methods such as buying CDs or downloading songs illegally, both of which have their own drawbacks. If music subscription providers really intend to increase their prices, what’s the proper approach to it?
In this article, we will go over some of the revenue and valuing issues plaguing the music business. Next, we discuss how price increases for subscription services may impact the industry. We also make suggestions on how to handle this matter properly to prevent negative consumer feedback and a drop in sales. We argue that if music subscription companies want to pursue price increases, they must improve their pricing capabilities and value propositions to ensure subscriber acceptance.
At Taylor Wells, we believe that we believe that compelling subscription offerings and value propositions are vital to securing and increasing customer loyalty. By the end, you will know how the music industry can properly convey its value through an effective price increase for streaming subscription services.
Should Music Streaming Subscription Services Increase Their Price?
The music industry is approximately generating billions of dollars in revenue annually. With the latest advances in streaming technology and online distribution, this number continues to rise exponentially.
Global music earnings reached $26.6 billion (£21.7 billion) last year, the highest amount since records began in the 1990s, thanks to the popularity of musicians like Taylor Swift and BTS. The industry’s earnings now come from streaming, which now makes up 67% of the growth.
The amount of money made by music worldwide in 2017 was $26.6 billion (£21.7 billion), which was a three-decade high. The IFPI reports that 589 million subscription payments were made in 2018, up from 523 million in 2021. Yet labels suggest that income could be higher and urge for higher prices.
Is the music industry really suffering from undervaluing? Since its launch in 2009, the premier streaming service Spotify has maintained its price of £9.99 for a single membership. The bulk of the competition uses a comparable pricing strategy.
Spotify implemented a freemium pricing strategy, whereby it provided basic features without a fee but charged for benefits related to particular products.
Despite the fact that Spotify was a free streaming service, users had to pay for extras like ad-free listening and offline music downloads. This has emerged as the most effective commercial strategy for attracting and keeping users on the platform.
Globally and among various customer groups and nations, Spotify’s pricing structure varied. Discounted Family/Student Plans from Spotify were launched. These gained enormous popularity all over the world. Nevertheless, despite the rise in subscribers, the business was still in its growth stage and frequently relied on free trials and discounts to draw in and keep subscribers.
Even an analyst expressed dissatisfaction with Spotify’s pricing.
They claimed there was a big opportunity that was neglected. They said that they are losing out because they have kept the pricing so simple that they haven’t really experimented with it as much as they should.
Robert Kyncl, CEO of Warner Music, has proposed that the US rate be increased to $13.25 (£10.83), based on the $9.99 US launch price from 2011 that was indexed for inflation. According to him, the cost of an hour of listening to music in the US is half that of an hour of watching movies or TV series on a streaming service. He, therefore, asserts that the music industry is currently 50% undervalued.
A survey of the American recording industry revealed staggering statistics: The average artist makes only 12% of their income from selling records, while 45% comes from live performances and 28% comes from streaming services like Spotify. This illustrates how little artists are actually making from their music, despite the fact that their efforts make up a significant portion of the industry.
Furthermore, an analysis conducted by the Berklee College of Music found that songwriters earned only 11% of streaming revenue, even though they are responsible for creating the core product upon which services like Spotify are built. These figures demonstrate just how little creators are actually getting back for their work, and the need for greater equitable compensation in the music industry.
GlobalData Music estimated the total global revenue for the recorded music industry at US $19.1 billion, a significant underestimation given some estimates of the actual size and value of the industry exceed US $160 billion.
Estimates suggest that only 20% to 25% of the value created by music is being captured in the recorded music industry.
This is further evidenced by an analysis from Goldman Sachs which found that while digital streaming revenue has more than doubled since 2013, it still only accounts for a fraction of the total US$ 160 billion value in the music industry. It highlights how much potential there is for growth and expansion, and how undervalued the music industry is. It stands to reason then, that the music industry is ripe for disruption and investment opportunities.
Will price increases solve the valuing problems of the music industry? It’s important to remember that consumer demand determines whether increases in prices are successful. Will the number of subscriptions decline as it did with Netflix? Or are consumers willing to spend more on music?
Discussion On Price Increase Model For Subscription-Based Music Streaming Services
Raising the price of music subscriptions can have both positive and negative effects. Thus, before deciding to raise their pricing, record labels and music streaming services have to weigh these. Once they have made up their minds to raise prices, they employ the best strategy.
Pros Of Music Streaming Services Price Increase
Price increases will enable recording artists, songwriters, and labels to earn more for their work, helping to ensure that the music industry, particularly the subscription business, remains economically viable.
Increasing prices can help to improve the overall quality of services offered by streaming platforms, as more money will be available for reinvestment into technology and content. Raising prices can also help streaming companies to become more profitable, allowing them to better finance their operations and strengthen their competitive positions in the market.
Cons Of Music Streaming Services Price Increase
Raising music subscription prices could also have a negative impact on streaming services’ customer base. Even though the increase in revenue may be necessary to ensure that streaming services remain profitable, it may put an additional burden on some customers who are already struggling financially due to the current economic climate. This could lead to a decrease in customer retention, as customers look elsewhere for more affordable options.
Additionally, higher prices could lead to a decrease in new customer acquisition since customers may be deterred by the increased cost of signing up for a subscription service. This could ultimately hurt streaming services’ bottom line if they are not able to generate enough revenue from existing customers to make up for lost potential profits from new customers.
Managing Music Subscription Price Increases Properly
Raising music subscription prices can be a risky proposition that may have negative consequences. Thus, businesses must have a good understanding of their consumers’ willingness to pay. Decide based on value not just for business but also for music subscribers.
If music subscription platforms increase prices, one of the main concerns is the proportion that artists will receive. At present, the majority of artists are not adequately compensated for their work when it comes to music streaming platforms. According to reports, Spotify and Apple Music only pay artists and bands about $0.0032 and $0.0056 per stream, respectively.
Most of the revenue only goes to a handful of artists on these platforms like Taylor Swift. Even though these sites offer a convenient way for people to access an abundance of tracks, most artists only receive a fraction of a penny per stream, which doesn’t come close to covering the costs associated with producing and promoting music.
In recent decades, music subscription services have provided good value to consumers.
If music subscription companies want to pursue price increases, they must improve their pricing capabilities and value propositions to ensure subscriber acceptance. Otherwise, music subscriptions may decline.
Streaming services have facilitated access to vast libraries of music worldwide for listeners, making it much easier for them to discover new music. In return, this encouraged musicians to create more. By providing easier legal access to music, streaming services have also helped to reduce piracy.
These developments are examples of win-win situations for both consumers and businesses. As such, they must be at the core of the value proposition of music subscription services, especially when streaming services price increase is put in place.
Implications Of Developing A Price Increase Strategy For Music Streaming Services
Music platforms can benefit from focusing on customer retention and loyalty while implementing a streaming services price increase. Businesses can increase user engagement and satisfaction by providing customers with incentives such as special offers for long-term subscriptions. Music subscription services can also offer value by providing an enjoyable user experience through improved speed, accuracy, and stability of their platforms.
Try introducing additional features such as exclusive content, high-quality audio, and more. By offering a premium version of their product, businesses can attract users who may be willing to pay for the added benefits. Music streaming services can also introduce tiered pricing plans that provide different levels of access depending on the user’s needs and budget. This helps them offer something for everyone, allowing them to increase their prices while still allowing customers to access music at an affordable rate.
Your organisational commercial capability coupled with the quality of your pricing strategy, people and systems will determine whether your streaming services price increase strategy will be effective. Our findings show that with the right set-up and pricing team in place, incremental earnings gains can begin to occur in less than 12 weeks. After 6 months, the team can capture at least 1.0-3.25% more margin using better price management processes. After 9-12 months, businesses often generate between 7-11% additional margin each year as they identify more complex and previously unrealised opportunities, efficiencies, and risks.
〉〉〉 Get Your FREE Pricing Audit 〉〉〉
Conclusion
Music industry and subscription services can effectively increase their prices by offering real value to consumers. Focusing on pricing and commercial skills within the organisation will result in significant advantages. Our findings show that when a business builds and embeds commercial capability across the business; bolstering its internal pricing skills and capabilities to build a sustainable pricing system, it can generate at least 3-10% additional margin each year while protecting hard-earned revenue and volume. This is at least a 30-60% profit improvement straight to the bottom line.
Strategic Subscription Pricing Model For Content Streaming Services
As streaming services become more and more popular, competition for market share has become increasingly fierce. Many of these services have implemented price increases recently to sustain profitability amid rising costs of licensing fees, royalties, and marketing. In fact, some streaming services have been successful in meeting their revenue targets due to these price increases. Going forward, it is likely that price increases will continue to be a part of most content streaming services pricing models to ensure vitality in the industry.
The problem is though, as competition increases and customers become more discerning, they are likely to be less willing to accept price increases. Thus, it is essential for streaming services to review their pricing models regularly in order to remain competitive and ensure that they are offering value for money.
In this article, we are going to discuss the recent price increases implemented by major streaming services and why they may not be sustainable. Then, we advise streaming services to build more strategic pricing approaches and effectively increase prices when necessary. We argue that subscription services will lose customers if they keep pulling down hard on the price rise lever.
At Taylor Wells, we believe that aggressive price increases are not strategic pricing. By the end, you will have a better understanding of value-based pricing and long-term price increase strategies for content streaming services.
Innovative Subscription Pricing Model For Content Streaming Services
Content streaming is quickly becoming the preferred method of entertainment consumption in today’s digital landscape. The convenience, affordability, and variety that come along with content streaming make it an attractive option for many consumers.
For media and entertainment companies, offering content streaming allows them to reach a wider audience. With more people tuning into streaming services, it’s important for businesses to keep up with the trends and ensure that their content is available where customers are looking.
The content streaming industry is becoming increasingly competitive, with Disney+, Paramount+, Netflix, Hulu, Amazon Prime Video, and more vying for market share.
Consequently, many streaming services are offering unique features to differentiate themselves from the competition. For instance, Disney+ offers access to a library of Disney movies and shows; Paramount+ includes additional content such as live sports and news; Hulu provides access to exclusive original programming; and Amazon Prime Video is known for its discounted memberships for Amazon Prime customers.
As such, pricing for some of the most popular streaming services, such as Disney+ and Paramount+, has increased in recent months. This trend is likely to continue as companies try to differentiate their offerings in an increasingly crowded market.
Disney+ recently saw the price of its ad-free ‘premium’ offering rise to $10.99 a month and the introduction of a ‘basic’ offering with advertisements for $7.99 a month. Paramount+ has also increased its basic and premium monthly subscription prices from 20% to 40% respectively after adding the Showtime programming suite to the company’s offerings. The ad-supported plan on the streaming platform went up from $4.99 to $5.99 per month, and the premium plan, which includes Showtime, jumped from $9.99 to $11.99.
Discussion On Subscription Pricing Strategy For Content Streaming Services
Robert Iger, the CEO of Disney, said the company was pleased that the most recent price increases for the non-ad-supported version of Disney+ were met with a little resistance from members, which gave them the impression that the business has some price elasticity.
According to Naveen Chopra, Chief Financial Officer, pricing is rising across the industry; and believes they have room to raise their prices further. He also added that the company’s prices will continue to increase in the future.
True, the sector is becoming increasingly competitive, with Netflix, Disney+, Amazon Prime Video, Apple TV+, and there is a grab for market share. However, subscription services will lose customers if they keep pulling down hard on the price rise lever.
An aggressive subscription price increase strategy is not strategic pricing.
Disney+ members have already slipped from 161.8 million to 157.8 million, and the situation is likely to worsen if the company continues to raise its pricing. The market value of the entertainment giant is thus anticipated to plummet by around $15 billion as shares of the company plunged by almost 9% to around $92.
Analysts report that Disney+ is still struggling amid budget cuts for marketing, fierce market competition, and ongoing economic instability. The company was able to stave off a larger decline in streaming revenue by increasing prices, but that approach might not be sustainable in the long run.
Disney+ intends to increase prices again later this year, but we also think that it will soon run out of headroom for further increases. Disney must definitely consider different avenues for revenue. Members of Disney+ are not free from the strain caused by rising living costs; if the company continues to rely on price increases to maintain revenue, it may only do more harm if they lose more subscribers. They should instead develop new, strategic value-based approaches to differentiate their offers and pricing.
Content streaming services can develop a value-based subscription pricing model without a price increase.
Many streaming services offer customised subscription plans based on the types of content that a user wants to access. This allows users to tailor their subscriptions to their own preferences, while still enjoying exclusive discounts from the provider. Additionally, many streaming services have begun offering “add-on” subscription packages, which allow users to add additional content or features for a small fee. This allows users to access an even wider array of content without having to sign up for a more expensive plan.
Another value-based pricing strategy that has gained traction in recent years is pay-per-view streaming. This type of pricing model allows users to purchase individual episodes or movies instead of signing up for a subscription service. This can be especially useful for users who don’t want to commit to a long-term plan, as it gives them the flexibility to watch what they want when they want without having to subscribe month after month. Additionally, this type of model allows streaming services to offer discounts on individual purchases, giving users the opportunity to save money while still enjoying their favourite content.
Finally, streaming services have begun experimenting with tiered pricing models that allow users to pay different amounts depending on the amount of content they want to access. This type of pricing strategy gives users the choice to pay for only what they need, while still providing them with a wide array of content options. Additionally, this type of pricing structure allows streaming services to offer discounts on larger packages, incentivising users to purchase more content at once.
When it comes inevitable, streaming services must be strategic when implementing higher prices.
One approach involves increasing prices incrementally over time. This allows businesses to steadily raise prices without immediately impacting their customer base too much. It also gives them the opportunity to test how customers respond to different pricing levels and make adjustments accordingly.
Another approach is to set a fixed annual price increase, such as 10% each year. This allows businesses to adjust their prices regularly while still giving customers a predictable expectation for their bill each month. It also gives businesses the ability to adjust their prices more quickly in the face of market changes.
One final approach is to introduce new services at higher prices while keeping existing services at the same price. This allows businesses to offer new features or products that customers may be willing to pay more for, while still offering a value proposition that keeps their existing customer base happy.
Implications Of Developing Pricing For Content Streaming Services
Streaming companies should take into account their customer’s needs when considering changes or improvements to pricing models. This could involve adapting different packages, offering discounts or bringing in subscription tiers. It may also be beneficial to conduct market research to determine the best way of pricing their services and compare how this affects customer behaviour. This could be done through surveys or focus groups.
Utilising data analytics tools such as AI algorithms and machine learning techniques can be helpful for streaming companies further refine their pricing models to better leverage their customer base and become more strategic in their approach to pricing.
Having a high-performing pricing team will be advantageous.
Our findings show that with the right set-up and pricing team in place, incremental earnings gains can begin to occur in less than 12 weeks. After 6 months, the team can capture at least 1.0-3.25% more margin using better price management processes. After 9-12 months, businesses often generate between 7-11% additional margin each year as they identify more complex and previously unrealised opportunities, efficiencies, and risks.
The long-term results of having strategic pricing for streaming services can be quite significant. Strategic pricing allows companies to maximize their profits while still providing value to customers. Strategic pricing can help reduce customer churn and increase the lifetime value of each customer. This helps to ensure that streaming services are profitable for years to come, as customers will remain invested in the product over time.
Invest in boosting commercial capability. Our findings show that when a business builds and embeds commercial capability across the business; bolstering its internal pricing skills and capabilities to build a sustainable pricing system, it can generate at least 3-10% additional margin each year while protecting hard-earned revenue and volume. This is at least a 30-60% profit improvement straight to the bottom line.
〉〉〉 Get Your FREE Pricing Audit 〉〉〉
Bottom Line
Streaming companies should take proactive steps to ensure that their pricing model is tailored to the needs of both customers and the company itself. By understanding customer needs, preferences and current market trends, companies can create a pricing strategy that provides value to customers while still being profitable for the company.
Market research can help streaming companies identify what features customers are looking for and how much they are willing to pay for them. Understanding customer habits, such as how often they use the service, can also help companies establish a pricing model that fits the usage patterns of their customers. Furthermore, staying informed about market trends helps organisations remain competitive in their pricing decisions. By leveraging these strategies, streaming companies can create a pricing model that is both fair and profitable.
For a comprehensive view of building a great pricing team to prevent loss in revenue, Download a complimentary whitepaper on A Capability Framework for Pricing Teams.
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