Netflix, a relatively new company, had a significant 15 percent drop on its stock, due to an increment in their product’s pricing.
“The company on Thursday morning revised downward, incrementally, its subscriber estimates for the quarter of the year that ends in two weeks. It did not change its financial guidance for the quarter. Still, its stock dropped almost 15 percent in heavy trading when the market opened Thursday.” (NY Times, Stelter)
The company separated their DVD-by mail service from the internet-streaming service, were the price for the DVD-by-mail was first a $2 add on, and it is now $8 for each separate service. This has encouraged many costumers to drop their Netflix membership and many others not buy it.
As a new company, Netflix has to be very careful with their pricing because they are just starting their marketing approaches and campaigns and a drastic change in price may not survive yet. When a product is recently going out to the market, it;s pricing needs to be well analyzed before launching it, in order to not change it afterwards, specially when the product has been on the market for such a short time.
NY Times by Brian Stelter