Questions

Has anyone increased SaaS subscription pricing by 100% and lived to tell the tale?

We've operated a SaaS product for many years and we think our pricing is too low to enable growth. I believe we need to raise our prices on all current customers and not just rely on higher prices for upgrades or new customers only. We're really serving customers and launching valuable features right now and would like to make an announcement in a couple months that the new pricing is going into force. To be fair, we plan on giving customers 60 days to decide if they want to continue service and we don't think there are any comparable alternatives to our service.

4answers

Many well-known SaaS companies have doubled their prices. I've personally worked with a few that have gone through it. In most cases, your conversion rates stay the same and you see a huge jump in revenue.

This is because people tend to under-price themselves. Also, your product improves over time so it provides more value and can support a higher price.

But don't raise prices for old customers. Grandfather them in so their plans stay the same price. In the long run, it won't make a difference to your growth since most of them will churn out anyway.

If you raise prices on current customers, you'll get a huge backlash. It gets nasty. I'm pretty sure that Zendesk tried it and had to reverse the price increase.

I highly recommend raising your price by 100% for a month on new customers. Keep a close eye on your revenue and your conversion rates. If things don't go well, you can easily reverse it and discount everyone that paid for the more expensive plan. Either way, you'll know what your market will actually support.


Answered 6 years ago

I can't name them off the top of my head but there are dozen's of SaaS companies who have done this. Some even went from FREE to only paid.

I would suggest the following
- Don't raise prices on existing customers unless you absolutely need to, to stay alive
- Test it first without build anything by updating your pricing page and see if there's a huge drop in conversions.
- Try starting with 50% increase first.

Just so you know, it's not about the price, it's about the value your product delivers. My rule is: How much $ do we save a company, then divide that by 3, that should be a good ballpark for pricing.

Hope that helps.


Answered 6 years ago

Yes, thousands of companies. This answers your social proof question.

However, what you really need to know is that due to price quality effect... it is entirely possible that by raising your prices you may actually increase volume!

I recommend doing a volume hurdle analysis before any decision is reached. How much volume can I afford to lose that the price increase will make up for? Then it is just forecasting what will happen to volume via elasticities.


Answered 5 years ago

Andrew at Mixergy has several interviews with founders who pulled this off. As a matter of fact, that's where I discovered Dan and Clarity.fm. And am I glad I did!


Answered 6 years ago

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