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Estd 4.22.2023
Based on the examples and discussions in our saas pricing book, Price to Scale, there are indeed cases where lowering prices has paid off by driving higher volume and ultimately contributing to long-term revenue growth. Here’s what our book highlights:
• Lower-cost tiers can be a deliberate strategy to boost user acquisition. As mentioned on page 91, strategically reducing the price can open up a broader market, enabling growth by attracting more customers—even if each individual sale earns less.
• The decision to lower prices should be weighed against acquiring customers at a lower price point versus the potential for expansion and renewals. Our book stresses that pricing decisions are highly contextual; balancing the number of new customers with the profit margin is crucial. In other words, if the new volume sufficiently reduces your cost of customer acquisition or encourages future upsells, the lowered price can indeed bring additional revenue that offsets the initial lower price.
• Case studies, such as the evolution of pricing plans (referenced in the discussion on Amplitude's pricing page evolution), illustrate how some SaaS providers started with lower prices to capture market share and later adjusted pricing as they gained recognition and could confidently cater to customers willing to pay more.
In summary, while dropping price doesn’t universally guarantee sufficient new business to offset revenue loss, our book illustrates that, when executed carefully, lowering prices—particularly through lower-cost tiers—can be an effective lever for scaling a SaaS business. The key is to balance short-term revenue implications with long-term growth potential and market share gains.