If you add a major new feature or module, do you give it to existing customers on their current plans or put it in a higher plan/new plan? How do you balance rewarding loyalty with capturing more value for new functionality?

Based on our pricing strategy book, Price to Scale, the recommended approach is to segment your customer base and tailor your strategy accordingly:

• For new functionality that adds substantial value, consider placing it in a higher tier or new plan. This approach helps capture additional value from customers willing to pay for enhanced capabilities while keeping the original offerings intact for legacy users. As noted in our book, raising the list price too steeply for existing customers could lead to balking at renewal time.

• At the same time, you want to reward loyalty. To balance this, consider offering existing customers creative alternatives—for example, a discounted upgrade path, bundled add-ons, or incentives like deferred payment terms. This strategy allows you to provide premium functionality without forcing a sudden, steep increase in price for long-term customers.

• Segment your users based on factors like usage intensity, the depth of their initial discount, and overall value received. In doing so, you can construct differentiated packages (a good-better-best model or modular add-ons) where existing customers can opt into the new functionality at a rate reflective of their relationship history.

In summary, our book advises that the best way to handle a major new feature is to differentiate your offerings. Use a flexible pricing ladder where legacy customers feel valued while also allowing you to extract additional revenue from new, more comprehensive plans.

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