Peter Peter - Founder, UserActive

How to Increase SaaS Pricing Without Upsetting Your Users

SaaS Pricing Increase

Would you like to increase your SaaS pricing, but you’re worried about how your customers will react? You’ve worked so hard building your business, you don’t want to do anything that’s going to risk your customer relationship. Let’s take a look at a smart strategy you can use to increase your pricing without upsetting your customers.

SaaS Pricing Increase Strategy

Having a strategy to increase your pricing is so important. I’ve seen many cases where software companies have increased their pricing and it hasn’t gone down very well with their customer base. There’s a varying degree of reasons for this. I’ve seen cases in which they feel that it wasn’t communicated well or in advance enough. They felt that a fair rationale or reasoning around why the price was increased was lacking. For some, there wasn’t enough transparency around the price increase, or they just felt that they weren’t valued enough. You want to avoid all of these things, and they can be avoided with a good strategy.

That being said, I’ve got a positive story about a SaaS pricing increase. Typeform built a really great product and they realised after quite a long time that they hadn’t increased their pricing. In this case, Typeform decided to double their pricing because it had been such a long time. Their rationale was that they thought if they doubled their pricing, even if they lost half of their customer base through cancellations, at least they would still have the same revenue. What actually happened was incredible. When observing their customers over the following two weeks after their SaaS pricing increase, they realized they had zero drop-off. They didn’t lose any customers and essentially they had doubled their revenue overnight.

Ideally you don’t want to leave it this long that you have to do such a big price increase. You want to be monitoring and reviewing your pricing regularly. Ideally, you want that same kind of experience where you don’t lose customers and you don’t have a bad fall back from customer response, upset customers and complaints.

Let’s take a look at the strategy that you can use to do this.

1. Have a Rationale for Your SaaS Pricing Increase

If there’s a good reason around your SaaS pricing increase, your customers are going to see and understand that and will see the value in what you’ve done for them. But how can you provide more value? Here’s a few suggestions:

  • Improve your product,
  • Improve the UI
  • Better the UX
  • Better your features
  • Provide more and better customer support
  • Build a better team
  • Use better materials around your product tutorials and help base, etc.

All of these things are increasing value in your offering and they’re giving you a good rationale for why there is a price increase for your customers.

2. Notify Customers in Advance

Give your customers a good warning and let them know three to four weeks before your price increase. You can start communicating gently and explain that you have been working on the product and list the improvements that will be happening, in addition to the subsequent benefits.

3. Introduce Product Improvements

Communicate exactly what is better in the product. Use emails, notifications and messaging within your product. Let them know what you’ve done and how they will benefit from it. If you’ve got new features, make sure you’re working on feature activation so that your customers are not only aware of the improvements and the greater value that you’re offering, but make sure they are also benefiting from and using it.

4. Sweeten the News

If you are planning to make your final announcement in a week, for instance, provide a special offer for your customers. For example, if a client upgrades from monthly to an annual plan, you keep them on the same pricing. You can also give a bonus, such as extra usage on the service you’re providing, or more complete customer support. Sweetening the news and making it a bit more palatable is a good way to present the new pricing.

You want to be really transparent about the changes that are happening, explain what it will be and why, and also provide something to make them feel good about what’s coming.

5. Monitor the Response

Keep an eye out for your behavioural analytics. Look for complaints or customer support requests and handle those as they come in. You might need to provide more allocation for things like these to make sure you stay on top of any potential fallback from your customer base. Hopefully you won’t have any problems to deal with and you’ll be receiving revenue in proportion to the value that you’re giving your customers because that’s what it’s all about.

Your SaaS Pricing Increase and Beyond

We hope these strategies help you when you’re thinking about increasing your pricing. This is just one way to improve your product so that you can get more users and grow.

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