I would look at this angle from three angles:
1. What price do we need to have to be competitive with other market offers (Netflix, Hulu, etc)
2. What value do our customers see in our product and what is their willingness to pay (consumer research driven approach)
3. Cost-based approach (what is the cost of buying the content, operating the platform, and buying CDN capacity, marketing, etc.)
Having previously built a similar product before in my career your pricing decision, in this case, will be very much driven by competitive pressure as pretty much everyone is trying to catch up with Netflix and offer a differentiated product vs them.
A very interesting question, and one I have had direct experience with - having managed a project to develop a market entry and pricing model for a new OTT subscription service for a non-media player.
WHAT DETERMINES PRICING?
These two were weighed against operating costs, to determine a price level that would generate a sufficient return.
Generally, industry has widely adopted value-based pricing over cost-based pricing. There was confidence in having sufficient data to determine price elasticity to maximise value as opposed to anchoring to costs.
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Hello!
This is the classical pricing exercise, they are very common and solved all the same.
There are 3 main methodologies for pricing:
As you can see, you can extrapolate these to practically any product you can think of.
Hope it helps!
Cheers,
Clara
Hi
I want to make it clear. The main point of Google move in this area: to take the market from Netflix. So, Google will put the prices below Netflix to generate the trial and repeated rate growth.
As proof of the high probability of this, let us see what Google did with the Stadia service. Google said the Stadia service costs $9.99 per month. That’s less than Netflix’s standard $12.99 monthly subscription and just $1 more than its basic service
I agree with Vlad, Piyush – try to force yourself to answer first and then share your answer. This way you will get more out of the exercise vs just asking the question.
Best,
Daniel
It would be great if you provide your ideas first and the experts here would help you with assessing them
Hi, I would consider all the 3 classical approaches of pricing strategies, discussing about pros and cons related to the company, the product, the competitor and the synergies with all the existing products.
Best,
Antonello
Hello,
This is a quite standard pricing case, and there are different pricing strategies that you can follow:
The final strategy can be a mix of the mentioned, don't forget the price differentiation strategy thatcan be important in many cases (e.g. Why don't you create 3/4 different subscription package addressing the needs of different customers clusters?)
Hope it helps,
Luca