How rapidly are Netflix price rises outstripping inflation?

Netflix is putting up its prices – again. The company was once renowned for freezing its prices, but customers on the Standard Plan are about to be hit with their third price rise in as many years.

I joined Netflix back in 2013, when the price was £5.99. Even though the company put up the price for new subcribers to £6.99 in 2014, it froze the price for existing subscribers as a “thank you”.

Gratitude now seems to have gone out of the window. Here’s how the Netflix price rises have been applied to my account since I joined.

March 2013	£5.99
June 2016	£7.49
November 2017	£7.99
October 2019	£8.99

That’s a 50% increase in price in six years, as the sharper mathematicians in the crowd are probably aware.

According to the Bank of England’s inflation calculator, inflation has averaged just 2.4% a year since 2013 (although those figures only go up to 2018, as the 2019 figures aren’t in). Accordingly, a £5.99 subscription in 2013 adjusted for inflation should cost £6.75 in 2018.

Even if we’re generous and assume inflation rises by 2.5% this year, pushing up the 2019 cost to £6.92, that’s still almost two quid higher than the rate of inflation. Or to put that another way, the new Netflix price is 30% higher than it would be if the price were merely adjusted for inflation.

Is there any way to beat the Netflix price rises?

The new £8.99 standard tariff isn’t the cheapest Netflix plan. There is £5.99 per month Basic plan, which isn’t going up in price this autumn.

That is, however, a pretty limited plan. You can only watch Netflix on one device at a time, as opposed to the two simultaneous screens you get on Standard. Worse still, picture quality is limited to standard definition. The Standard plan – somewhat counterintuitively – allows you to watch in HD. If you want Ultra HD (4K), that’s £11.99 per month.

So, Netflix is turning the screw, just as rivals from Apple (£5.99 per month) and Disney enter the market and investment experts warn that the company’s stock looks seriously overvalued. It’s brave, I’ll give them that.

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