How do you communicate and handle it if you’re doing pricing experiments (like A/B testing higher prices for new signups)? Do you worry about existing customers finding out and feeling cheated?

Below is a direct response based on the frameworks and insights shared in our saas pricing book, Price to Scale.

Direct Answer

When running pricing experiments—such as A/B testing higher prices for new signups—you should clearly differentiate how new customers are treated compared to your loyal, existing customer base. It’s important to communicate both the rationale behind the experiments and the benefits that current customers continue to receive. You shouldn’t have to worry that existing customers will feel cheated if you apply smart segmentation and proactive, transparent communication.

Key Insights from Price to Scale

Different Treatments for Different Segments:
In Price to Scale, we explain that raising prices for new customers is often less contentious because they are given a clear choice at sign-up. For existing customers, however, it’s essential to maintain fairness. The book emphasizes that forcing annual price increases on current customers can be very risky. Instead, consider creating distinct pricing lines (or tiers) for new versus existing customers.
Segmenting Existing Customers:
As discussed in our pricing strategy book, one effective approach is to segment your existing customer base. Recognize that some customers might use the product very frequently while others may have acquired deep discounts at the time of signup. Offering options such as upgrades or discounts, provided under a transparent policy (e.g., if they commit to a longer term or choose an add-on) helps maintain trust.
Proactive and Transparent Communication:
Clear communication is key. When you’re engaged in pricing experiments, inform customers about the reasoning behind the changes. Explain that your experiments are part of a broader strategy aimed at ensuring long-term business growth and innovation. By being upfront, you reinforce that existing customers are valued and treated differently from new signups who have different entry points to the product.
Operationalizing Pricing Strategies:
Our book also covers how different teams (from Product to Sales) may have varying views on pricing. Ensure that all teams are aligned on how these experiments are framed to external customers. A consistent message across channels will help mitigate any perception that current customers are being treated unfairly.

Practical Application

For New Customers: Run A/B tests with distinctly higher prices and use the experiments as a means to outline product value.
For Existing Customers: Maintain their current pricing or offer tailored upgrade paths that match the product’s enhanced value. Be ready to explain that the experimental pricing is only for new sign-ups, and any changes in the future will come with additional benefits or options.

Summary

In Price to Scale, we advocate for a balanced and segmented approach that treats new customer experiments separately from existing customer experiences. By using clear, proactive communication and offering alternative options for your established customer base, you not only protect your loyal users but also create a more controlled environment to test pricing strategies.

This approach ensures you stay transparent, uphold customer trust, and continue to drive growth through continuous innovation.

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