Netflix Price Increase – Is it Time to Raise Your Fees, Too?

This post originally appeared at www.sendouts.com.

Netflix is raising the price of renting DVDs through the mail by 60% – and customers are none too happy about it.  The announcement of the price increase has the web all a-twitter with thousands of complaints on Facebook and other websites.

 

What used to be a $10 monthly fee to rent physical DVDs in addition to online streaming will now cost customers $16 a month.  Customers can still subscribe to the streaming service only for $8 a month.  This change in price structure will undoubtedly push consumers toward online streaming options, following trends in the entertainment market.  Netflix is confident that people who rely on DVDs will continue to shell out the cash, and while it is a move to increase revenue, it is also a move to phase out physicial DVDs and set up Netflix as a top contender in streaming video.

 

As the economy stabilizes, should recruiters begin raising their fees as well?  It may have been a while since you raised your fees, or you may have even cut your fees to stay afloat in a floundering job market.  But is now the time to consider hiking up your fees?

 

Do you have a niche in the market? Like Netflix, when you have a great service, you can afford to raise your fees, no matter what the economic climate is.  Identify the services you offer that your clients cannot live without, and raise your fees accordingly.

 

Are you looking to phase out a service you offer? Perhaps there is a service your firm offers that presents more problems that the revenue is worth.  Charging premium fees for an out-dated service can help phase it out.  Then, you can focus on the real revenue generators, as well as the services you see being in demand in the future.  Plus, clients who really need a service that is falling by the way-side will be willing to pay for it.

 

What factors do you consider in raising your fees?  Will potential backlash from clients prevent you from making a strategic pricing move like Netflix did?

Views: 105

Comment by Jessica Lunk on July 13, 2011 at 11:46am

@morgan, i think you hit it spot on, & I think this makes it hard for anyone to adjust their fees.

 

i'm wondering if anyone has seen any agencies take a creative approach to segmenting and repackaging their services to get more out that 25% fee...

Comment by Craig Silverman on July 13, 2011 at 12:02pm
I think fees should be determined by the amount of value you deliver, your speed in time to fill, your accuracy, the ability to deliver matched quality talent. Those who waste a clients time should take a price reduction, along with those who push paper. If you pull a resume off a job board and send it over the value is very low, if you headhunt (passive sourcing) an expert or deliver a candidate you represent exclusively then the value is higher...
Comment by Sandra McCartt on July 13, 2011 at 1:03pm
I have done the "Mary Carter Special"  Two for the price of one at a 30% fee on the highest paid candidate when another candidate who was much less qualified happened to fit a position that my client had not listed with me and were not authorized to pay a fee to fill.  They bunped the top paid fee from 20 to 30%.  Everybody was happy.
Comment by pam claughton on July 13, 2011 at 1:29pm

Sandra,

That is awesome! Love it.

Comment by Dave Nerz on July 13, 2011 at 2:16pm
Going back to the Netflix example, there are clients that require different levels of service and prices should reflect these differences.  The client that requires the DVD mailed to them (in recruiter terms: rejects top candidates, works slowly to offer feedback, changes the job description mid process) should pay more for the service they require.  The client that is getting the streaming video (in recruiter terms:  clear job order, working directly with hiring manager, instant feedback, appropriately speedy offers) pays a more modest rate.  If clients are priced this way, there is a good chance we will be dealing with a better group of clients within a year or two.
Comment by Candace Nault on July 13, 2011 at 2:42pm
Great perspective Dave, I agree with you on this!

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