How to Raise Rates Without Raising Ire (Ask Netflix)

Published on: 
06/18/2014
Any customer who wants a rate increase, please raise your hand. I don't see any hands. Anyone? No one?

As you might have guessed, that result is predictable. No customer is going to jump up and down and shout, "Please give me a rate increase. I really, really want to pay more!"

On the other hand, if you are the business owner, a rate increase is undoubtedly desirable.

So, how do you as an attorney business owner get what you want and keep your clients happy at the same time?

The answer is in the method.

Netflix is a good example of how to do things right. Recently, the Internet-based media company raised its monthly price to $9, a $1 increase over its previous price, for new customers. Its rate for existing customers will remain the same for another two years.

Netflix had not imposed a rate increase on customers in almost three years. It plans to use the additional fees to offer a wider selection of original programming.

Lawyers should take note of what Netflix did right.

Netflix began by raising its rates for new customers only. New customers are less likely than existing customers to object to an increase.

It worked in an "adjustment period" of two years to allow existing customers to get used to the idea of a rate increase. Thus, it is more likely to maintain the goodwill of its customer base.

The price increase is not excessive. A $1 increase will probably seem reasonable to most new and existing customers.

Netflix had not raised its rates for quite a long time. Because it has kept its rates constant for an extended period, customers are more likely to quietly accept the increase.

It will be offering more programming. By giving customers more value, it is "justifying" its rate increase in the minds of the customers.

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