If we do grandfather customers on legacy plans, should that be indefinitely or for a limited time? And how do we eventually encourage those on old plans to switch to the new pricing?

Based on the approach outlined in our pricing strategy book, Price to Scale, it’s generally advisable not to grandfather legacy customers indefinitely. Instead, consider a limited grace period that clearly defines the transition timeline and paves the way for eventual migration to your new pricing structure.

Here are some key takeaways from our book:

• Limited Time Grace Period: As discussed in the book, a common strategy is to allow existing customers to renew at their current (legacy) rates for a defined period—say, an additional year. This grace period gives them time to prepare for and adapt to the upcoming changes.

• Segment and Tailor the Transition: Recognize that not all legacy customers use your product in the same way. The book emphasizes segmenting your customer base, which enables you to craft specific, proactive offers for different customer cohorts. For instance, customers who derive high value from additional features might be more receptive to an upgrade option, while others could be enticed with a discounted rate if they commit to a longer-term arrangement.

• Gradual Price Adjustment with Ramp Deals: The book provides examples such as multi-year ramp deals (like GitLab’s approach) where customers start at their current rate and gradually move to the new pricing over a few years. This gradual adjustment helps mitigate the financial impact and eases the transition for budget planning.

• Enhanced Communication and Value-Framing: It’s crucial to be transparent about why these changes are necessary. Use the transition to highlight new features, improved value, or benefits associated with the new pricing tiers. This upfront communication helps manage expectations and facilitates acceptance.

In summary, our book recommends grandfathering legacy customers only for a limited period to ensure that pricing evolution aligns with the value delivered by the product. By setting a clear timeline, segmenting your customer base, and offering creative ramp or upgrade options, you encourage customers to migrate to the new pricing—safeguarding both customer satisfaction and overall revenue growth.