When was the last time you updated your pricing? Has it been a long time? In this article, we will discuss how frequently you should review and update your software pricing.
1. When Should You Review It?
It might be the case that you have been working on your product, making improvements and your company and team are all getting better. Yet, the value that you’re receiving from your customers is staying the same. There’s a bit of a disparity between the value that you’re giving and the value that you’re receiving and you want to even these out a bit. It’s always better to give more value than you receive, in our opinion.
2. How Frequently Should You Review It?
If you set up a pricing committee every six months, that’s a good interval at which you can consider and review pricing. Include people from all departments in that meeting: people from product, marketing, technical teams, customer success, sales, support, etc. and ask for input from everybody. What’s the consensus of feedback? How do customers feel? How does everyone feel about pricing? Do they feel it can be higher or lower?
Also, it’s not just about the price point. It’s also about where features sit in your different tiers and where usage sits within your different pricing plans. It’s important to think about this holistically and not just about pricing increase. Sometimes it can be price changes, sometimes it can be pricing model changes as well. If you consider that and have a meeting every six months, and continue reviewing it you’re in a good place to be and avoid letting it lag too long.
3. When to update the pricing?
If your pricing is reviewed every 6 months, then you want to update your pricing every 6 to 18 months so that you always stay on top of it in the review. Then, you release the update to your pricing on your pricing page. Make sure to communicate that clearly, explaining why the change is occurring, when and how and justify that change by making clear the value that they will get from the changes.
4. Consider the Rate of Your Company Growth
The other thing you want to do is consider the rate of your company’s growth or the rate at which you’re developing. If you’re moving quickly, your pricing might be changing faster. You might be iterating through your models, through your pricing structure and it may require more frequent changes. If you’re going more steadily and are more established, then your pricing might not need to be updated every six months. In that case, you might lean towards the 18 months cycle. Maintain whatever cycle works best for you, whether it’s a pricing change every 6 months or 18 months. Stay on top of your review schedule to make sure you have a good pricing model and strategy for your customers and business.
We hope this article will encourage you to think about the cycle and time frame in which you should be reviewing your pricing, and that it in turn helps you to improve your product, get more users and grow!