Question

Prenatal massage business

For what value are our customers really willing to pay?

For what do they currently pay?

How are they currently paying?

How would they prefer to pay?

How much does each Revenue Stream contribute to overall revenues?

Answer 1

For what value are our customers really willing to pay?

Netflix is company built on simplicity. Its product is simple in nature: a streaming service to watch your favorite movies and television shows without the troublesome advertisements. Netflix recognizes that, by lacking advertisements, it eliminates a particular revenue stream; however, this adds value to the actual product and should, in turn, relate to even more subscribers.

For what do they currently pay?

Netflix has three separate subscription methods: “Basic”, “Standard”, and “Premium”. Each, evidently, vary in price, but each comes with its own specific perks and characteristics. This is also referred to as product feature dependent pricing, which is a form of fixed pricing. With the Basic plan, a subscriber must only pay $7.99 per month, Netflix is available on one screen, and the first month is always free. The reason behind the first month being free to prospective customers is to attract consumers and for Netflix to prove its value and worth within that first month in order to secure a subscription. The Standard plan is $9.99 per month, in which customers now receive HD and an additional screen to stream on. Now, for example, a customer could have Netflix running on their home screen in the living room as well as their own personal laptop. And the Premium plan includes HD as well as Ultra HD and, instead of two screens with the Standard plan, consumers can stream on up to four separate devices.

How are they currently paying?

Payments are done automatically on a monthly basis. Each customer must simply provide their debit or credit card information on our secure website in order to create an account with us. The first month is free and the customer will not be billed. Also, we are willing to accept PayPal.

How would they prefer to pay?

Our customers prefer to pay through an automated system as opposed to paying with cash because it’s easier and more time efficient. Our customers want Netflix now and realize that putting their information into an account is much simpler.

How much does each Revenue Stream contribute to overall revenues?

A highly significant portion of the overall revenues is derived from the subscription fees. Although this may seem like the only source of revenue for Netflix, it is not. There are short-term investments that Netflix makes in order to fund their projects and/or secure licensing rights. The vast majority of the income coming from subscriptions are reinvested into the company in order to expand internally; however, there is a small portion of that money that is used for external investments.