We’ve been talking about rates this week for National Global Entrepreneurship Week. Our previous discussions included: Lessons from Plumbers: How to Set Freelance Writing Rates, How to Raise Your Rates, and How to Find Freelance Work. Today, we’ll focus on what freelancers can learn from the way Netflix raised rates recently.
This brings up a good point, which is that as a freelancer you can learn about your business from a variety of sources, especially other business. Here’s a few points I’ve learned from Netflix.
What Freelance Writers Can Learn From Netflix
Netflix recently lost 800,000 U.S. subscribers in their third quarter, and has predicted even more to come. This comes from a combination of a rate increase and a change in services. There are a lot of great business lessons here for freelancers, so let’s take a closer look at how we can learn from this to improve our writing businesses.
Unreasonable Rate Increases
Netflix didn’t just raise rates a little, they raised them a lot. Enough to make the average subscriber take pause and even cancel their membership. A small increase probably wouldn’t have had this kind of reaction. People expect your prices to go up eventually, but when you blindside them with a huge increase, you had better back it up with something really special.
Another mistake here was raising rates and then giving the reason for the increase as problems that the client wouldn’t care about. They were having issues with certain contracts and in replacing DVDs. Well that’s fine and good but does the average subscriber care about this? Not enough to pay a drastically increased rate.
As freelancers, you should raise rates from time to time. But make sure your increase is reasonable and that you justify the increase properly. Don’t tell a client that you “need to make more money” or that you have to pay for your son’s braces, or your husband’s golf trip. Make sure the justification is one related to business and something the client would understand.
Too Many Changes
It was interesting to me to see Netflix implement a rate change, change in service, and then change in the way it did business, all at the same time. What’s that old adage about change? That no one likes it! Now, we all have to deal with change from time to time, but the way you implement it with clients makes a big difference in how it is perceived. Netflix made too many changes at once.
Now think about how something similar might affect your freelance business. If you need to change the hours you’ll be available, raise your rates, or change the lead time on projects, make sure you’re doing it slowly, with enough time in between so your clients can get used to it. Too many changes at once and your client may bolt.
May Sure You’re Still Offering the Best Quality Product Around
Netflix must have thought that clients were happy with their product, and as a result would stay with them even if they raised rates or changed service. In reality, many people I talked to said they were unhappy with the quality of disks that arrived or the wait times for some of the movies. So perhaps the few I talked with were indicative of the average customer, because when the changes hit they dropped the service.
If you are going to make a change of any kind, make sure you offer such an outstanding product that your client won’t want to lose you. For freelancers this could mean:
- Fast turnaround
- Pleasant demeanor
- Understanding of their product or company
- Proactive communication
- Unique industry knowledge
and on and on.
Are You Really the Only Game in Town?
While no other company can really compete with Netflix head on, there are several that can compete with bits and pieces. Amazon Prime, Hulu, On Demand, and RedBox were mentioned by people who considered leaving Netflix. While these services can’t really compete one on one, if a client changes their viewing habits, another service may be able to meet their needs. Let’s say they decide to only rent movies occasionally, or only look up a TV show episode once in a while.
This means that while no other company was exactly the same as Netflix, there were alternatives if a subscriber wanted to change their viewing preferences. Your freelance writing clients might just do the same thing. While you might be a great “one stop shop” for them, if you make too many changes at once (or raise rates too high), the client may decide to farm out pieces of their work to someone else and just leave the other parts go. Believe in your product and the unique brand of professionalism that you bring to the table as a freelance writer, but never assume you’re the only writer around.