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Estd 4.22.2023
Based on the guidance in our saas pricing book, Price to Scale, the recommended approach is to avoid an abrupt, forced migration for existing customers on a legacy plan. Instead, you should consider a strategy that respects the historical value and negotiated terms with your current customers while moving the broader customer base toward the new pricing paradigm.
Here are key principles from Price to Scale to help you decide:
• Grandfathering: Instead of forcing customers into a new tier, grandfather those on legacy plans. This shows appreciation for their commitment and avoids sudden price shocks during renewal periods.
• Gradual Transition: For customers who may benefit from the new features and pricing structure, you could design an incentive-based migration plan. This could include offering a phased transition that allows for a smoother adoption of the new pricing model over time.
• Usage-Sensitive Approach: Recognize that different customers use your product in different ways. As discussed in our book, customers with significant functionality and usage might warrant a more tailored upgrade path, while lightweight users might be better served by maintaining a legacy-lite option or a new lower-tier package.
• Mitigating Churn: Forcing a migration without adequate support can lead to customer churn—something we detail in our discussion on price points and churn management. By providing legacy support or a considerate migration plan, you help maintain customer trust while still incentivizing transitions that benefit your overall pricing strategy.
In summary, the book advises that maintaining legacy support or a tailored grandfathering approach is preferable to a forceful migration. This not only respects your current customers’ expectations but also helps manage renewal conversations, reducing the risk of churn as you evolve your pricing strategy.