Netflix is raising prices, again – by 12%. Though some consumers might whine, and ask, “how can they keep doing this to me?”, this is yet another great opportunity for property managers and homeowners alike to learn valuable lessons in pricing strategy.
There are two key lessons. First, how they’re doing it. Second, that they can do so confidently.
The pitch is, they’re raising prices not to make more money, but to improve the product for their customers. Will they make more money? Yes. Absolutely. But the messaging here is key – they’re investing for customers.
“We’re updating our prices to bring you more great entertainment”
Their messaging goes so far as to highlight new releases in their pricing email!
Think about how you can use this with your repeat customers (as all subscribers are, by definition, repeat customers) in your business. If you’re a vacation rental operator, and you raise prices for 2021 (which we believe you should – demand will exceed 2020 in many destinations!) can you message that in a positive way? For example, investing in increased sanitization? Investing in upgrading the property? Of course customers would love it if you upgraded without raising prices, but if you want to raise prices it helps to justify it, as Netflix masterfully demonstrates.
Second, they make no excuses for raising prices, because they don’t need to. They know this because they use science, likely based on past price increases, as well as the perceived value of their product, in this case art - their catalog of unique content is what will retain customers. Telling customers that they’re raising prices straight, with no “wishy-washiness” or apologies, communicates confidence and shuts the door on discounting discussions.
Warren Buffet said “The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you've got a terrible business.” In the VR/STR market today, you’d be surprised how much pricing power you may suddenly have. Air travel is out. Living in a destination for a month is in. Price accordingly.
With the holidays coming up, many of your vacation rental’s repeat customers may be booking their 2021 holidays, or thinking about them. How can you get the confidence you need to unapologetically raise prices? Can you message that to your repeat customers now, so that they not only accept your price increases without complaint, and perhaps even jump on making reservations faster?
Turns out, not only is Netflix great for COVID quarantining; it can also teach us some useful lessons on pricing for people with businesses to run!
Interested in more pricing strategy, check out our on-demand discussion on Rebounding after COVID-19: Pricing Strategies and Tactics to help your Vacation Rentals recover > >