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Netflix expected to make $500 million more per year after jacking up prices

Netflix Price Increase

One or two extra dollars a month might not sound like much, but when you have nearly 100 million subscribers paying for your service, it adds up quickly.

Earlier this year, Netflix revealed that all of its standard subscribers would have their monthly fees raised to $9.99 to match that of new subscribers joining the service. The price hike began rolling out in May, will continue throughout the year, and is likely to make Netflix hundreds of millions of dollars.

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Nomura analyst Anthony DiClemente believes that the bump in subscription rates — which will affect well over 10 million members — could be worth $520 million in added revenue for the streaming service, reports Business Insider.

In case you haven’t been keeping track (or simply aren’t a Netflix user), the company increased the monthly fee for its standard subscription plan from $7.99 to $8.99 in May 2014, and then again to $9.99 in October 2015.

Those price increases were for new customers only, but this April, the company finally told existing subscribers that they would have to pay the new fees as well, although they would be given a grace period. The longer they had subscribed to the service, the longer they could pay the old fees.

DiClemente says that there will be casualties (he projects 480,000 cancellations once the new price rolls out), but the extra revenue from the remaining customers should more than make up for any losses.

“We note that this has long been a tenet of our investment thesis on the domestic business, as slowing subscriber trends are more than offset by increased monetization,” DiClemente said in the note to investors on Monday.

Jacob Siegal is Associate Editor at BGR, having joined the news team in 2013. He has over a decade of professional writing and editing experience, and helps to lead our technology and entertainment product launch and movie release coverage.