Most SaaS founders want to increase their prices at one point or another but are afraid of customer backlash. If you are convinced that your product is underpriced, you need to find a way to act on that conviction. All it takes is a little bit of planning and you’ll be able to execute the price increase without hiccups and turn it into an opportunity for growth.
We accomplished all these goals. Here is how you can do the same.
Set a specific date several weeks or months in advance.
Here is how we announced the price increase on our blog. Below is the email template we used to ping our existing customers about the price increase:
And here’s an example of what responses looked like:
You need to decide whether you want to grandfather your existing customers or not. We decided to do so. They would keep the old pricing for life for the user seats they already signed up for.
How you decide on this will always depend on your specific business case. But be aware that raising prices on existing customers can piss off your customers. When Zendesk did this, an angry thread ensued on HackerNews, which made a guy called Girish Mathrubootham decide to start his own help desk software company. His company, Freshdesk, now employs 400 people, has more than 30,000 users (among them large enterprise clients like Cisco) and has raised more than $41M.
If existing customers and current trial accounts decided to add new user seats within the next 14 days, they would keep the old pricing for those as well. However, after 14 days they would have to pay the new (higher) prices. This led to a huge bump in sold seats for Close.io during the 14 day period.
When we increased prices, our conversion rates stayed the same, our customers stayed happy, we had a huge bump in paid seats and our average customer lifetime value increased by over 10%. It’s impossible to predict what kind of results YOU will get. The only way to find out is to try.
But the one thing we can tell you is this: you probably haven’t found your perfect price point yet. And your perfect price point is likely higher than your current price.
So stop making excuses and start planning your successful price increase.
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