.png)
Estd 4.22.2023
Below is a summary of the recommended approach from our pricing strategy book, Price to Scale, for handling tier migrations for existing customers:
Direct the transition with a customer-centric migration plan:
• As outlined in our book, one effective method is to offer a grace period for existing customers. For example, allowing them to renew at the old rate for an additional year can soften the immediate impact of any pricing changes.
• This approach respects the customer's history with your product while offering a clear path to upgrade.Avoid forced upgrades:
• Price to Scale cautions against “forcing” customers into higher tiers, noting that you cannot change a customer’s willingness or needs with pressure. Instead, create a tier structure that naturally supports their growth, enabling a gradual migration that aligns with their evolving usage and value perception.
• For instance, instead of requiring customers to jump to the most elite tier to access certain add-ons, consider a special upsell feature menu that allows for more flexible transitions.Use tailored incentives when appropriate:
• For larger customer segments or in cases when the pricing change mandates a company-wide migration, thoughtful incentives can help. Mapping customer size (like companies >$100M ARR) to new plans and providing upgraded discounts or deferred payment options can encourage migration in a way that's beneficial to both the customer and your business.
• Note, however, that if a migration becomes a full-scale project due to its breadth, it should be treated as a separate initiative from the initial pricing rollout.
In summary, our book recommends that you handle tier migrations through a well-prepared, customer-first approach—leveraging grace periods, avoiding forced upgrades, and applying tailored incentives. This methodology ensures a smooth transition while maintaining customer trust and engagement.