How to communicate price increases to existing customers?
Yesterday, I asked how you set your pricing strategy and discounts (you had some interesting insights and experiences to share – Thank you!).
Setting prices is one thing, but what about increasing them?
Customers can be very sensitive to price changes (especially upwards).
How would you communicate price tier increases to existing customers?
Do you use any justifications? Compensations? (e.g. in the form of adding some exceptional features)
If possible, feel free to share your template on how you communicated this without losing them.
260 views
Replies
Depending on the market, if you use ai api, I fear they will look for better alternatives, this is also the general problem, people are only open to pay what is for them right. So if you are open for why you increase and also what they get in return, that would work best. Be open and honest
minimalist phone: creating folders
@sietse_schelpe The worst scenario is when you are a user and you are dealing on X API :D Prices are ridiculous :D
Warmup Inbox
It depends a lot on your situation.
Is it a pure price increase, or are you also adding a feature?
If you add new features, it is quite easy. You can simply create a new plan with those features and encourage your current users to upgrade.
Best practice for SaaS is to have 3 to 4 plans, so if you have fewer than 4 plans, adding a new plan is a good way to increase prices.
Are you grandfathering your existing customer?
You can choose to keep the existing price for existing customers. That gives a strong incentive for those users not to churn, as they would need to pay more if they come back.
You can even leverage this to run an upsell campaign. Phantombuster for example, sends an email to all users saying they will increase pricing at the end of the month but if you upgrade before the end of the month, you will keep the current price forever.
minimalist phone: creating folders
@fabian_maume New feature is the most convenient scenario because you have a proof for a real change, but it is worse when you onboard a new developer (who is the reason for cost increases and price increases). 😅 Hard to negotiate. :D I like the second strategy, but what industry you operate in is harder for acquiring new clients, and you need to increase the price for existing ones anyway?
Maybe this is my isolated analytics of users, but justifications don't matter.
Customers aren't just personas, they're people with intelligence, and trying to actually make too much of a justification can just come off as corporate, cold, and lose the candor you've built if you have a good relationship with your users.
When I had to work to launch something impacting a large group of users before my current gig, it was the same story. Being up front, saying why prices had to increase, and just respecting my users has gone a long way.
minimalist phone: creating folders
@csurita Okay, so what was your explanation for not having churns?
@busmark_w_nika great callout! Something I didn’t callout was rollout really helped in my cases with churn.
We definitely tried to work with stakeholders, depending on how important they were even given a VERY extended rollout phase. This softened the blow significantly, and in rare cases our clients couldn’t accommodate the changes they were very open to negotiating.
If I’m being completely transparent, it also depends on the lifecycle of the business. Just starting or mid-scale? Probably do a MUCH more in depth customer analysis before rollout to determine if this increase is going to create momentum you need to get to the next stage. Fairly established? I think there’s cushion for churn and the real thing to ask is how much can you stomach.
Great thread overall, really something that isn’t talked about enough honestly.
minimalist phone: creating folders
@csurita You are right about the product cycle – it varies, but let's say that our situation was like – starting with a relatively new product, but had reckoned the pricing badly at the beginning so we had to adjust too soon :DDD