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Netflix Is Raising Prices: Here's What You Need To Know

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Netflix Is Raising Prices: Here's What You Need To Know

Fifty-eight million U.S. subscribers will soon be paying a higher monthly subscription fee for their Netflix, Inc. (NASDAQ: NFLX) membership.

What To Know

For the fourth time in Netflix history, the company will be raising its price, The New York Times reported. The latest hike, at 13 percent to 18 percent, represents the largest increase in its 12-year history. The company's basic $8.99 per month plan will rise to $9.99 per month; the HD Standard plan will increase from $10.99 to $12.99 a month; and the 4K Premium plan will rise from $13.99 to $15.99.

Netflix will use the incremental cash to finance its growing portfolio of original content and to better manage its debt load. The last time Netflix increased its prices was in late 2017.

The price increases also apply to countries in Latin America and the Caribbean, but exclude major markets like Mexico and Brazil.

What It Means

Netflix faces the risk of having a large wave of consumers canceling their membership over the higher costs, The New York Times noted. But based on the stock's move to the upside following the news, the argument could be made investors aren't concerned.

The company's price increase could also be seen as a bet it can continue raising prices over the coming years. If consumers are satisfied with Netflix's hit programming, including "House of Cards," "Bird Box," among others, it may be successful in this strategy.

Netflix's stock traded at $352.36 per share, up 5.8 percent at time of publication.

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Photo courtesy of Netflix.

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