Netflix customers in Australia could soon be facing steeper monthly charges. The popular streaming...

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Netflix customers in Australia could soon be facing steeper monthly charges. The popular streaming service on Monday confirmed that it recently tested higher subscription prices for new customers in Australia. The company—which has nearly 100 million global subscribers and expanded to Australia in 2015—has reportedly tested raising prices for new subscribers by as much as three Australian dollars (AU). Netflix’s test resulted in some Australian customers seeing price increases for the streaming service’s Basic plan (going from AU$8.99 to AU$9.99 per month), while Netflix’s Standard plan increased AU$2 to AU$13.99 and the Premium plan increased AU$3 to AU$17.99 per month, according to The Australian. Netflix confirmed the tests, but emphasized that it has not yet formally announced any permanent price increases. “We continuously test new things at Netflix and these tests typically vary in length of time,” the company said in a statement. “In this case, we are testing slightly different price points to better understand how consumers value Netflix. Not everyone will see this test and we may not ever offer it generally.” Lecturer’s note: These price increase ‘tests’ became the permanent new prices in June 2017, and were followed by price increases in the US later in 2017. Discuss why you think Netflix conducted this test and what you think they found from that test based on their later decisions. Refer in particular to concepts from the Week 3 lecture topic, such as what price elasticity of demand is and how it is calculated and used, its relationship with revenue, and relevant determinants of price elasticity of demand.

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To find the greatest costs, businesses frequently test several prices for identical products. Netflix might have experimented with alternative pricing for its services by using price elasticity theories. Since different markets have varied market capabilities for the income distribution, if customers don't care about price fluctuations, they can charge various prices to make more money. Price elasticity principles are used in the price increase for Netflix services to understand how responsive consumers are to rate adjustments.
Prices were raised, claims Huddleston (2017), in order to better assess how much Netflix is valued by customers. Even though the cost will be considerable,

Netflix customers in Australia could soon be facing steeper monthly charges. The popular streaming service on Monday confirmed that it recently tested higher subscription prices for new customers in...

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