Recently, Spotify has joined the legion of streaming services that have raised their price. Not only will this make their customers upset, it won’t solve their revenue problem. Because I’ve survived several economic crises, I’m going to share what any company SHOULD do when this problem arises…
Why Spotify Raising the Price Won’t Make a Difference
According to the New York Post, Spotify will raise the price of all of its plans by approximately $1 a month.
The new price structure will be:
- $5.99 a month for Student Plans
- $10.99 for a Premium Plan
- And, $16.99 per month for a Family Plan
This move is not a surprise to me — or anyone else for that matter. After other streaming services like Netflix stocks crash, the company starts panicking…
These businesses start cutting jobs…
Then, they will try and recoup losses by raising prices…
ALTHOUGH IT NEVER WORKS, IT HAPPENS IN STRUGGLING CORPORATIONS EVERY DAY.
Ultimately, why doesn’t this approach work? It’s so simple, it’s stupid…
NO ONE IS GOING TO PAY MORE FOR THE SAME BASE PRODUCT WITH NOTHING EXTRA!
So when Spotify or whoever raises their price, consumers don’t think it’s worth it. As a result, the businesses lose revenue instead of recovering it.
But, how do increase sales without adding to operating costs?
The REAL Solution to the Problem
To explain the concept behind this problem-solver, let’s look at something in direct contrast to a struggling industry…
A LUXURY ONE.
Some people spend hundreds of thousands of dollars on designer watches like Rolex. And they seem to weather any and all shifts the economy throws at them.
Spotify costs significantly less and they can’t people to spend less than $20 a month… So guess what?
PRICE IS NOT THE ISSUE!
The difference between the two is the value the customer feels it has. That’s why the same person with a Submariner on their wrist won’t pay for no ads on their podcasts.
For that reason, Spotify shouldn’t chase chump change by raising the price by $1. They need to ask themselves how to add value to satisfy their current customer base and attract new ones.
That is the way to keep your business expanding while others contract.
Be Great,
Grant Cardone
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