Year of the Poorly Timed Price Increases

Companies considering hiking the monthly fee on their subscription services need to read the room.

Photo by Victor on Unsplash

When Democratic analyst, media personality and long-time Democratic Party strategist James Carville uttered his immortal words, “It’s the economy, stupid,” they fell into a different world.

It was 1992, future president Bill Clinton was facing a tough election campaign.

When he said, “It’s the economy, stupid,” Carville was trying in his signature way to explain why Clinton would be elected. At the end of the day, Carville and plenty of other strategists predicted, voters would care more about their day-to-day cost-of-living and job prospects than practically any other issue.

Carville was right and “It’s the economy, stupid,” has since become a kind of Beltway byline, an immutable law of the physical universe, inescapable.

The sluggish economy, and working-class voters disenchanted by it, is one of the main reasons voters saw fit to usher Donald Trump into the White House on the heels of a two-term Democratic President they felt hadn’t delivered the family income and wage increases working-class voters were promised.

With the current state of the economy as it is, and looking bleaker by the quarter, “It’s the economy, stupid,” has become the new catch-all, the popular new turn-of-phrase.

With this phrase in mind, companies choosing now to announce a price increase are doing so at their peril.

Netflix lost 200,000 subscribers last quarter, corresponding with a sudden dip in the company’s fortunes as large stockholders sold off their investments. The company is expected to lose 10X that number of subscribers in the coming months.

The streaming giant is experiencing this setback for many reasons- a market saturated with other streaming services, the end of lock-downs, an overall economic downturn. There is another reason, however, for this sharp drop: Netflix announced a rate increase in February.

“The cost of your plan has changed,” Netflix told its subscribers in a terse email. “This change takes effect Thursday, March 10th, 2022. You can view your updated membership details by visiting your Account. New Plan Price $19.99.”