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Estd 4.22.2023
Based on our pricing strategy book Price to Scale, yes—there have been instances where companies shifted between pricing models, and doing so can positively influence customer retention and overall growth.
• One example discussed in our book involves a transition where a company moved from a seat-based licensing model to a usage-based “events” model. Initially, the change was introduced as an opt-in transition. This pilot helped identify customers who were struggling under the previous model and who were at risk of churning.
• During the rollout, customers who had concerns about the higher costs under a per-seat (or per-employee) licensing model and were negatively impacted by that structure found the new model more aligned with their actual usage. As a result, many customers who might have otherwise churned opted into the new plan, leading to improved retention rates and supporting growth.
• The book emphasizes that the key to a successful switch is transparency, clear communication, and ensuring that customers understand exactly how usage is measured. This clarity on measurement and billing was crucial to build trust and demonstrate value, ultimately making the change beneficial both from a growth and a churn-reduction perspective.
In summary, our book Price to Scale shows that strategically shifting from one pricing model to another—even from a per-user to a usage-based model—can reduce churn and boost growth when executed thoughtfully and with a pilot-driven, customer-focused approach.