Yeah, Netflix raised their prices for less deliverables.  That pretty much sucks, even if their service is still comparatively pretty good.  But people are pissed, and I think they have a right to be.  Then again, it doesn’t matter much if you have a right to be pissed, the consumer is going to piss and moan about it through every social media outlet they can when they feel snubbed.

So what does this tell us as photographers?

You might say that the outrage would indicate that raising prices is a bad thing.  The problem is that Netflix didn’t raise prices soon enough to keep clients happy.

What?!?  Am I nuts?  Hear me out.

Netflix is in a tough spot.  They didn’t pioneer streaming content, but they certainly popularized it.  It worked well for them at the time – since it wasn’t popular before them, Netflix was able to get the streaming content for cheap.  Now everyone wants in on the magic, and the price to stream good content is going through the roof.  So Netflix’s Cost-of-Goods-Sold is about to go up when they renegotiate contracts.  As you all know, I believe that a business has to stay profitable at all times, so I’m not opposed to the price increase.

What I’m opposed to (and hey – I’m a Netflix customer) is that they haven’t been raising prices all along.  As the service gained traction and got more popular Netflix should have been raising the price.  That would have served two purposes.

First, it would have helped to frame the market’s expectations of what streaming media is worth.  Right now, we’re used to getting it for free or for a pretty paltry sum.  That’s a problem, because even though we all like a free ride we entrepreneurs know full well that consuming content at an unsustainable price ain’t going to carry us through the long-term.  So Netflix should have hooked us with low prices and steadily bumped the price along the way.  They needed us to believe that the content and the method of delivery was worth more.

Second, raising prices would have given them extra revenue.  Sound simple, right?  Fact is that the model that Netflix was operating under was unsustainable.  Everyone knew the price on streaming content was going up.  They should have been preparing for that, socking away funds for the inevitable day when the contract was coming due.  While they had the opportunity to drive more revenue, they should have been investing in the future.

So, let’s bring this around to us.  If your photography business is gaining traction – raise the price.  Yes, it seems greedy, but it is really necessary to secure your future.  First, if you aren’t at profitable or sustainable levels you’ve got to get the revenue stream up.  But you also have to be reframing the market’s expectation of what your work is worth.  If you are in demand, even a little bit of demand, create more by raising the perceived value.  Get people used to paying more and valuing your work more.  You’re going to need that brand-worth going forward.

Beyond that, while you are making money, make more.  You can’t just calculate your expenses and COGS today and assume those things will stay stagnant.  Your lab/album company/employees/accountant/etc are all going to keep costing more.  You don’t know what stupid huge cash-suck is going to come out of nowhere and readjust your idea of what profitable is.  Like  the old-folks used to say, you have to make hay while the sun is shining.  Make it – don’t wait until later because you might need today’s money to pave the way to tomorrow.

Netflix went and pissed us off by allowing us to not value what they were providing for so long.  Now they are coming along and wanting reasonable compensation and we’re not happy the gravy train is off the tracks.  So here is my advice.  Stop just limiting yourself to thinking about pricing your work based on what it costs – you have to make sure that you are covering costs but it is far more important to price based on the value to the client.  Netfix let us believe that streaming media was cheap, now they want us to believe it is worth more for the same thing (or less).  They had to start changing our minds earlier, not at the last minute.

What do you think?  Are you charging as much as your work is worth to the client?  Is your price helping the client to understand how important your work is?  And are you preparing for the future, not just covering yourself for today?   Netflix damaged years of customer evangelism not for raising prices, but for not raising them soon enough – are we in danger of the same punishment?

Let me know what you think, it has definitely given me much to consider.

– trr