Netflix’s 2011 announcement is the classic bad one, and it was bad less for the price than for who heard it and how.

A case: Netflix, 2011

In July 2011 Netflix split its DVD-by-mail and streaming plans. For customers who wanted both, the cheapest bill “jumped from $10 to $16 a month.” In September it announced it would move DVDs to a separate service called Qwikster, then dropped the idea in October. In the third quarter Netflix lost 800,000 US subscribers, falling from 24.6 million to 23.8 million, and its shares fell 27% in after-hours trading on the day it reported Reported.

Its letter to shareholders named the problem precisely: many long-term members “felt shocked by the pricing changes,” and more of them canceled than Netflix expected. It added: “We’ve hurt our hard-earned reputation, and stalled our domestic growth,” and “we are done with pricing changes.” Dropping Qwikster, Reed Hastings had already admitted to “moving too fast” Reported.

ReportedCNN Money, October 24, 2011, quoting Netflix’s third-quarter letter to shareholders and Hastings’ October 10 statement.

Read it against the earlier chapters. The rise was 60% for customers who wanted both services, far beyond any cost they could see (chapter 5). The people who left were long-term members, the ones with a reference price (chapter 4). And a second change came on top of the first. Netflix went on to grow for another decade, but that quarter shows what a careless announcement costs.

Customers forgive a price. They don’t forgive a surprise.

What a good announcement says

1. The new price, in dollars“Our 60-count bottle goes from $40 to $43 on October 15.” Percentages make people do math.
2. The reason, in one sentenceName the cost that rose (chapter 5). If you absorbed part of it, say how much.
3. What you’re doing for themThe stock-up window, the grandfather period and its end date, price protection. This makes it a letter, not a notice.
4. How to change or cancelFor subscribers, a plain link to skip, change or cancel; California requires how to cancel in a fee-change notice Published. For everyone, a real reply-to address.
5. From a personSigned by the founder or whoever customers know. Short.

What it doesn’t say

• “New pricing structure,” “adjustment,” “to continue delivering value”: a rise ashamed of itself.
• Anything about demand, competitors or “the market.”
• A per-day number without the full price beside it (chapter 7).
• A second change bundled in. One change per announcement.

Where and when

Email subscribers inside your notice window, with SMS for those who’ve agreed to it. Email recent and repeat buyers a week or two before the date. No site banner: new visitors see one price. Put the reason and protection policy on an FAQ page. Templates are in Appendix B.

Brief support first

Support needs the new prices, the reason, the dates, the stock-up and protection rules, and authority to give a one-time courtesy, such as the old price on one order. Read every price-related ticket for two weeks: they’re the earliest signal of whether the story is landing.

Do this

• Write the subscriber notice and repeat-buyer email from the templates. Read them to someone outside the company. If they ask “so is it going up or not?”, rewrite.