Netflix's price hike will boost your bill as much as $2 a month

Netflix's most popular $11-a-month plan will rise to $13 in the US. Its low-end plan will cost a buck more, and its premium tier gets a $2 bump up to $16.

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Joan E. Solsman
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Netflix plans to increase its subscription prices starting this month for all tiers in the US, the company said Tuesday, with its most popular plan rising from $11 a month to $13. 

"We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members," a company's representative said in a statement Tuesday.   

Netflix's standard plan -- its most popular, allowing two simultaneous streams and offering HD-quality video -- isn't the only one getting a $2 price hike. The premium tier, which unlocks four simultaneous streams and ultra-HD video in addition to HD quaility, will rise to $16 a month from $14. 

The company also will increase the cost of its cheapest plan, the basic tier that streams to only one device in standard definition, by a buck to $9 a month from $8, the first increase to that entry-level price in almost eight years. 

New members will be signing up at the new rates immediately, and existing members will see their bills rise progressively over the "next few months," Netflix said. In the past, Netflix has rolled out price increases to its newer members first and its most loyal subscribers last. But the company is pacing these increases faster than it has before. Its previous rate hikes usually had advance notice of several months to a year before they went into effect for existing members. 

For this hike, existing members will be notified by email and within the Netflix app 30 days before the new prices are applied to them. 

Watch this: Netflix's price hikes are coming quick

Netflix has long aggravated financial watchers with its eye-popping budgets despite its persistently low subscription price. Without enough money coming in from members to fund all its investments, the company has been taking on large sums of debt to keep expanding the number of shows and movies it makes and to continue upgrading its product. Wall Street welcomed news about the rate increases, with Netflix shares rising more than 6 percent to around $355 in trading midday Tuesday. 

The company has a bumpy history of price hikes. In 2011, Netflix said it would divorce its DVD-by-mail service from its streaming one. The DVD spinoff would be called Qwikster, and rather than a combined $10 bill for both, customers would pay $8 for each, essentially dropping what felt like a $6 increase on customers out of the blue. The move enraged its members, and a chastened Netflix ultimately aborted the spinoff idea, but not without losing 800,000 subscribers and 77 percent of its stock's value in four months.

But Netflix's more recent tack, to ease consumers into price increases more gently, has generally gone over fine with customers. CEO Reed Hastings has said in the past that "consumers are tolerant as long as something [on the service] is improving."  

The price hikes will begin Tuesday in the US and will also apply to countries in Latin America and the Caribbean where the company bills in US dollars, such as Uruguay, Barbados and Belize. The increases exclude major markets like Mexico and Brazil. The company, which operates virtually around the world except China, didn't specify any plan for increases in other big markets in Europe or Asia. 

Netflix is expected to explain the pricing plan in detail Thursday, when it will report its latest financial results.

Originally published at 7:02 a.m. PT. 
Updated at 9:56 a.m. PT: Adds context and further details.

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