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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, the answer is nuanced:
• It’s not uncommon for SaaS companies to evolve their pricing metric over time—for instance, shifting from per-user pricing to one more directly tied to the actual value (like usage-based or per-customer). In our book, we discuss how products like marketing automation or customer success modules often benefit from metrics that reflect the real source of value rather than a simple per-user count.
• One example discussed is that companies, including Gainsight, originally relied on per-user metrics but later realized that certain features better align with metrics such as customer count or usage. This change wasn’t just about chasing higher revenue; it was about linking pricing to the true benefits customers received. When customers see that the cost more fairly corresponds with the value they gain (and potentially see their own ROI more clearly), their reaction tends to be more positive even if a change is initially met with some resistance.
• However, a key takeaway is that any change in the pricing metric must be carefully planned and communicated. Customers can be sensitive to changes—especially if the new metric indirectly leads to higher costs that aren’t clearly justified by additional value. The book emphasizes that only after careful analysis of usage patterns and customer value should such a metric change be executed. When done well, the result is a pricing model that grows with the customer, thus reducing churn and reinforcing trust.
In summary, while changes to the primary pricing metric can meet some customer initial apprehension, aligning the metric with the true value they receive usually results in better long-term customer satisfaction and reduced churn. It’s all about ensuring that the pricing evolution makes sense from the customer’s ROI perspective, as detailed in Price to Scale.