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Lessons from Netflix pricing: Ignoring statistical fallacies … and trolls

Sep 3, 2015
4 min

Lessons from Netflix pricing: Ignoring statistical fallacies … and trolls

Here’s a simple business question for you. Let’s say you had 100 customers and charged $10 per month for your service. You decide to raise your prices by 60% – yes 6-0 – and when the dust settles you still have 97 customers. In every month after that, your customer base grows. Would you make that deal? To save you the arithmetic: your revenue after the price increase is $1,552, vs. $1,000 prior to your move. Assuming your costs are constant, your profits have also increased s

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Behavioral Pricing: Why coffee and music don't mix

Jul 17, 2015
4 min

Behavioral Pricing: Why coffee and music don't mix

Let’s talk numbers. Say a specialty drink at your favorite coffee shop costs $5. If you gave up two of those drinks per month, you would have enough money to pay for a standard $9.99 per month subscription to a music streaming service such as Spotify or Apple. I used that example recently in a talk at the New Music Seminar and have seen people make similar comparisons on social media. It is convenient and it also gets people’s attention. Both coffee and music are very familia

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Apple just launched a “value war” in music streaming

Jun 12, 2015
4 min

Apple just launched a “value war” in music streaming

We’ve talked about this before: music has value. Potentially, a lot of value. And now, Apple is seizing their share. But Apple and its music industry partners have done far more this week than enable the launch of a new music streaming service. They offered the world some common-sense lessons on what strategic pricing means, how to do it without Big Data razzle dazzle, and how to explain it in basic jargon-free language. In doing so, they also went against a lot of convention

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