this post was submitted on 06 Nov 2023
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There's a scene in Fight Club about how auto companies approach recalls, and a similar method is applied for these price hikes. The company predicts how many people will leave or change plans or whatever with their changes and they price it out so that they end up making more money.
And for a small example let's say you have two customers paying $10/month for a service. If the price increases by $11, and one customer leaves, you are now making $21/month from the service.
Now it's not as simple as that in the real world, but that's the general idea.
The issue here is that even if a vocal minority leave these streaming services, or social media there's still a large amount of people putting up with their shit.
And as a bonus you have less customers to provide support to!
That's literally what they teach you about basic economics at school..
The standard graph of price increasing on one side and customer demand decreasing on the other, and how companies try to find the crossover point.
Sorry mate this is not some special fight club logic. It's not even really accounting or economics logic, it's just kinda common sense.
What price should I sell my lemonade for? I'll have more customers if I sell it cheaper...
The part which seems lost on most commenters is that these companies have huge and very sophisticated market research campaigns. They can predict with great accuracy how their demographics will respond.
That's pretty much what the above person said lol
They have a good idea of how many people will leave before they do it.