Best practices for raising prices on existing SaaS customers? Grandfather them?
We've been running our Web-change monitoring product Versionista for over a decade (first as a side-project, last few years full-time). Crazily, we haven't adjusted our core pricing in about 8 years. 🥶Which, we know, is crazy. (We have added/removed plans, but the core pricing remained the same.)
So know we're digging in and really re-evaluated our pricing. (We may simply not have enough volume to A/B test w/ any confidence.) Pricing is probably going UP.
SO let's say we arrive at "perfect" prices. What do we do with our existing customers? (All Stripe-subscribed, many multi-year subscribers.)
- Grandfather them?
- "Silently" charge them at the new prices?
- "Noisily" charge them at the new prices? (I.e., email/etc highlighting new pricing)
It's a hassle to maintain multiple plans just for pricing reasons (we've done it before). And we'd love to nice and tidily have everyone on the same plans. But we worry about churn.
Thoughts?
You're probably not going to get a clear answer here as it'll depend how much you're increasing the price by, how many existing users you have and how likely those users are to cancel. Silently upgrading the prices sounds like a really bad idea though.
You mention it's a pain having multiple plans but another option is to deprecate the old plan, introduce a new one with the new pricing with some extra perks/features, then people on the old plan can optionally upgrade.
Why is there no obvious pricing link on your homepage by the way? Is there a strategy behind this?
Thanks for the feedback.
Yeah... we A/B tested this a few years ago, and hiding the pricing until sign-up results in i) more account creations and ii) more paid subscribers.
That said, pretty much everyone complains about it (and we're likely losing on SEO), so we need to test whether this is still true.
Just curious to know more: since you mentioned in your original post about the lack of volume for AB testing, how big a difference did it make when you hid the pricing page?
We had a 30% better conversion rate (to free trial) when we hid pricing. (I actually don't seem to immediately have data on difference in # of free accounts created for this 4 year old experiment.) We ran it for 7+ months to get significance (which itself is not an ideal practice, i.e., "run until significant" is flawed).
So, ideally, we don't want to have to run a half-year experiment for pricing: particularly as we now have better intuitive sense of what we need to change.
(We probably will run another experiment on hiding/showing pricing pre-account creation, however.)
Hey Pete!
Pricing and grandfathering is always tricky business. If you decide to grandfather some/all, make sure to communicate that to them if/when you communicate pricing changes. If you don't grandfather and want to transition all users to new pricing, here are my best pieces of advice:
Thanks Corey, that's good advice!
3-6 month forewarning... yowzers.
It's kinda funny how as small(er) businesses we respectfully alert customers to pricing changes. Meanwhile, whenever I open my cable/Internet bill, the charges are always totally different from month to month. (Same also for a few notable big-time SaaS products.)
The power of monopolies...
3-6 month warning is probably preferred, but I think 6-8 weeks does just as well with proper communication.
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