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Estd 4.22.2023
Based on the insights from our saas pricing book, Price to Scale, the answer is nuanced:
• Customers generally appreciate a predictable pricing structure because it builds trust and reduces uncertainty. Frequent, unpredictable changes—especially if they're not clearly explained—can lead to confusion and erode confidence.
• When considering dynamic AI adjustments to pricing, transparency is key. Our book discusses the concept of price transparency (see Fig. 11: Deciding on Price Transparency) and suggests that the level of transparency should match your market’s characteristics. In larger, more homogeneous markets, clear and open pricing can help scale sales and solidify trust. In contrast, when dealing with customer segments that are less familiar with dynamic pricing—or where pricing models are traditionally stable—sudden, uncommunicated changes may be met with resistance.
• For existing customers, who have expectations set by prior pricing, it is typically more advisable to be transparent about how pricing might adjust. This doesn’t mean every minute change needs to be broadcast, but having a clear policy or communication strategy that explains why and how pricing could evolve (for example, due to fluctuating costs or value delivery) can preempt confusion and build confidence.
• If dynamic pricing is applied only to new users, consider that this tiered approach might create pushback from long-term customers if they learn they’re getting a different value proposition without explanation. Both groups ultimately benefit from clarity regarding your pricing strategy.
In summary, rather than silently applying dynamic AI-adjusted pricing for newcomers while leaving legacy customers in the dark, it is generally wiser to be transparent and explain the rationale behind these adjustments. This approach aligns with our book’s emphasis on building trust through clear, justified pricing strategies.