Back when Netflix first started, its viewers had access to its collection of DVDs for around $5 a month.
Times have changed.
The basic plan for Netflix starts at $8.99 a month and only goes up from there.
Their premium plan, for example, is as high as $17.99.
That makes it one of the more expensive streaming plans on the current streaming market.
Netflix also changed the price of its plans over the years.
You may wonder why Netflix has become so expensive.
Here are 10 reasons Netflix is so expensive.
Why Is Netflix So Expensive? (Top 10 Reasons)
1. New Product Features
On the Netflix website, the company goes over some of the reasons that led to price increases.
One of those reasons is the addition of new product features.
In an effort to become the leading streaming service in the world, Netflix is always trying new products.
They want to serve the needs of their customers before their customers even realize they need it.
To do so, Netflix conducts a lot of experiments and offers new products for its customers frequently.
Whether it’s analyzing the viewing habits of a customer and promoting videos they think they’ll have an interest in or making it easier than ever to find new shows, Netflix is always trying to anticipate viewers’ needs.
Those products cost money.
Besides running the experiment, which needs funding, if Netflix decides to support a product, then they need to allocate money to whatever the product needs to stay running.
If that means more servers, then they’ll pay for more servers.
If that means more sophisticated software to sort through patterns, then that means they’ll pay for better software.
Whenever Netflix wants to introduce a new product to keep their viewers satisfied, you can expect potential price increases to fund that product.
2. New TV Shows
Although Netflix used to be a place where you could rent existing DVDs, it slowly transformed into a streaming service.
Instead of renting DVDs, you can watch them on their streaming service instead.
They changed their business model again when they started to make their own original TV series.
It was a gamble, but one that has paid off.
Netflix shows tend to cover concepts that standard network shows won’t.
They place an emphasis on allowing independent directors to have free rein with their shows.
While not all shows have been a success, Netflix has a pretty great record for critically-acclaimed, if not trendy, shows.
The problem with adding TV production is that it costs money.
Netflix tends to let a show go over budget with the expectation that it will be a hit.
They’ll let the producers hire sophisticated equipment, top actors, and fly to locations that not every studio has access to.
Because of the quality of their production, the cost of producing it is high.
With Netflix producing new shows every year, as well as continuing existing ones, that’s a lot of money going towards TV production.
To fund it all, Netflix has to have enough money.
That means high prices on its streaming plans.
If Netflix continues to increase the number of series it produces every year, then you can expect your Netflix plan to also increase in price.
3. Original Movies
Besides producing TV shows, Netflix also produces several original movies throughout the year.
Like their TV shows, it was also a gamble for Netflix to enter the movie industry.
It’s a different ballgame than producing a TV show.
Netflix was able to find success in the film industry as well.
It has since produced several movies.
Many of them feature A-list actors and Oscar-worthy performances and production.
That sort of talent and quality doesn’t come cheap.
To continue to produce top-level quality for their movies, Netflix has to fund their development.
Since making movies can sometimes be more expensive than TV shows, it requires a large budget.
To come up with the budget, Netflix has to use the money generated through subscriptions.
Since they continue to produce more movies every year, the price of their plans also increases.
As costs for the movie industry climb, you can also expect the price of your subscription plan to climb.
Netflix is expensive because it needs to cover costs associated with the movie industry.
You may not realize it, but your monthly subscription plan also includes sales tax.
While Netflix advertises a certain subscription plan, the amount that you pay can be quite different.
It all comes down to the tax amount that’s generated by your county or state.
Since a subscription service is classified as a sale, those who pay a sales tax in their state or county also have to pay a sales tax on their plan.
Netflix takes care of the math and charges you a certain amount according to the sales tax rate.
That’s why some of their plans in certain areas are more expensive than others.
If you live in an area with a higher sales tax, then you can expect a more expensive Netflix plan than someone who lives in a state with a low sales tax or someone with no sales tax.
A sales tax can add as little as a few cents to your plan to as much as a few dollars.
If you’re already paying for their premium service, for example, then those extra dollars can add up over the year.
Netflix is expensive because you live in an area with a high sales tax.
Like all things, inflation also impacts the price of your Netflix subscription plan.
Inflation is a situation in which the buying power of a currency decreases.
It costs more to buy a product that was cheaper a few months ago, for example.
There are several causes of inflation, but the main driving force is when the money supply of a nation outgrows that of economic growth.
Inflation impacts Netflix in several ways.
It costs more for them to produce TV shows and movies.
It costs more for them to keep the servers running and to pay their employees running the software.
Since operational costs increase due to inflation, they have to drive up their prices to cover those costs.
When inflation occurs, the price of most products ends up rising.
Netflix is no different.
To keep itself alive and earn revenue, it has to increase its prices.
Netflix is expensive when inflation is on the rise.
When Netflix originally got started, its only streaming competition was Hulu.
At that time, Hulu had a focus on streaming recently-aired TV shows.
As Netflix changed its business model and provided more services, other companies started to take an interest.
Tired viewers with high cable bills were quick to make the change to Netflix once it started to make partnerships with certain networks that allowed them to stream their shows.
Streaming started to take over.
These days, almost everyone has a streaming service.
Networks like HBO, AMC, and CBS have their own premium streaming services.
Disney entered the market with Disney Plus and even YouTube has started its own streaming service despite having been a free service for years.
With the market now flooded with competition, Netflix knew it had to deliver high-quality content to keep its viewers.
It’s a focus they continue today.
They’ve invested in their services to ensure that their viewers experience few hiccups and bugs.
This is something not all other streaming services can provide since they’re still new to the technology.
Netflix has also doubled down on its TV and movie production content.
Their focus is on delivering premium quality content that will keep their viewers engaged with Netflix instead of its competitors.
Because they are competing with several other platforms, they have to use expensive technology and take on a lot of costs to deliver the kind of quality that their viewers expect.
Since it costs more to deliver that quality, Netflix viewers have to pay more.
There may come a time when its viewers won’t be happy with the price and will seek a cheaper service, but that time hasn’t come yet.
Netflix’s prices are high because of the competition in the streaming market.
7. HD Viewing
If you pay for a basic plan with Netflix, then you only get to watch your favorite TV shows and movies in standard definition.
Netflix reserves its HD and Ultra HD for its higher-paying subscribers.
You’ll need either the Standard or Premium service to watch in HD and Ultra HD.
This is different from some of its other competitors which allow you to watch certain shows in HD even on their most basic plan.
For many viewers, this makes Netflix expensive.
The reason that Netflix doesn’t include HD in its basic plan is that they’re likely trying to encourage you to join their Standard plan at least.
Another reason is that it costs them a little more money to produce an HD version of the show or movie.
To make the picture clearer and high-definition, the crew needs more expensive equipment.
It also requires more editing time, better software, and an experienced visual effects editor.
Essentially, it’s more expensive to produce an HD and Ultra HD show than a standard definition one.
Because of that, Netflix assigns the costlier definitions to those who are paying more for the service.
Netflix is expensive because it costs more to produce an HD version of a show.
8. Fewer Screens
When comparing Netflix with some of the other streaming services, it may be surprising to note that other streaming services allow you to watch on more than one screen even with a basic plan.
Netflix restricts you to a single screen on their basic plan.
That means only one viewer can be watching Netflix at a time.
On Amazon Prime or Hulu, though, several people can be watching on different screens.
To watch Netflix on different screens at the same time, you need to be either a Standard or Premium member with them.
Considering that other companies allow you to use several screens on their basic plan, this makes Netflix appear quite expensive.
There isn’t a real reason for Netflix to keep basic users from using several screens aside from wanting to push them to their Standard or Premium plans.
Netflix is expensive because it doesn’t allow its Basic plan users to share their subscription when other streaming services at the same price, or cheaper, do.
9. International Content
One of the areas that Netflix stands apart from its competitors is its international content.
Before Netflix, mainstream audiences had to go to independent film festivals to see foreign films.
It was harder to have access to them.
Netflix made it possible for international directors to bring their movies to American audiences.
Now, viewers can watch shows and movies that seem wholly original to them because they’re from a different country.
They’re not reliant on the same style of storytelling that Hollywood produces.
However, obtaining international films also comes with a cost.
Netflix has to pay for the various permissions to stream the movie or TV show from another country.
There are various geo-restrictions that they need to contend with, too.
Some content may have restrictions for certain parts of the country, for example.
They need software that can detect where a viewer is from and then deny them access to the title if it’s restricted.
There are also currency rate differences.
In some areas of the world, it may cost more to buy streaming rights to a movie or show because their currency has a higher value than the American dollar.
Adding foreign films and TV shows can be costly for Netflix, especially if they don’t hit it big with audiences.
To make up for these costs and to fund future projects, Netflix has to keep its prices high.
Netflix is expensive because it gives international films and shows a platform.
10. Sole Funding Is Through Subscriptions
A final reason that Netflix is expensive is that its sole means of funding and revenue is its subscriptions.
Most other streaming platforms have some other means of supporting their streaming platform.
For Amazon, it relies on its Prime subscriptions.
Not all Prime users watch Prime Video, but they still pay for them through their subscription to Amazon Prime.
Other streaming platforms that are networks, like HBO and CBS, rely on ads and investors to fund their streaming.
CBS, in particular, still has its usual ads on its network.
It can use those funds to further support its streaming service even with its subscribers.
Netflix doesn’t have that luxury.
It relies on the money generated by its subscribers to fund its operations and projects.
Because it doesn’t have another funding method, Netflix has to raise prices to stay above its costs.
Netflix is expensive because subscriptions are the only way it makes money.
How To Save Money On Netflix
Since Netflix has set rates for its plans, it’s difficult to find ways to save money.
However, here are a few tips you can use to make subscribing to Netflix cheaper.
1. Choose The Basic Plan
The best way to keep Netflix cheap is to subscribe to its Basic subscription plan.
This plan will always be cheaper than its Standard and Premium plans.
While you don’t get as many features as the other plans, it does grant you access to all of Netflix’s TV shows and movies.
If that’s all you want Netflix for, then the Basic plan will serve your needs.
2. Cancel When You’re Not Watching Netflix
If you subscribe to other streaming platforms and you know you’re not going to be watching anything else when your favorite show starts, then you should briefly cancel your Netflix subscription.
There’s no sense in paying for something that you’re not using.
You can easily save a bit of money every month by only paying for Netflix when you’re actually using it.
You can even cycle through all your subscriptions and pay for them for one or two months before moving on to the next one.
Besides always having something to watch, you can keep your budget down by restricting yourself to a single streaming service a month.
3. Buy Discounted Netflix Gift Cards
You can find various Netflix gift cards in stores and online retailers.
The great thing about gift cards is that they sometimes qualify for sales or special discounts.
Keep a close eye on your favorite coupon websites for news about Netflix gift cards.
It can allow you to get a few months of Netflix at a cheap price.
When the month is over, then you can cancel the plan and wait for another discounted gift card.
With this method, you’ll never have to pay full price for a Netflix subscription.
4. Share With Friends Or Family
You can also make Netflix a shared service with your friends and family.
Netflix allows you to make several different profiles.
This ensures that everyone can watch what they want without interrupting someone else’s show.
The best way to share a Netflix account with friends and family is to buy the Premium plan.
Then have everyone split the cost between the members of the group.
This drives the price down significantly, especially if you have a large group of people.
The Premium plan also allows you to share several screens at one time.
This decreases the chance of being unable to watch Netflix because someone else already is.
If your friends or family are especially kind, then you may even be able to watch their Netflix account for free.
Netflix is expensive because it delivers high-quality TV shows and movies.
It continuously updates itself to ensure everyone can watch their favorite show no matter what device they’re watching on.
Because subscription plans are Netflix’s only means of income, they have to raise the prices to keep up with operational costs.
If you want to save money on your Netflix account, then consider the tips above.