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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Based on our pricing strategy book, Price to Scale, small, frequent price increases can be advantageous—particularly when your pricing is tied closely to usage or underlying cost fluctuations. Here are some key points to consider:
• When your cost structure is closely connected to customer usage (for example, in models like cloud or big data where usage levels can vary significantly month‐to‐month), smaller, more frequent adjustments allow you to align pricing more directly with the actual value delivered and costs incurred. As discussed in Chapter 5 regarding tracking usage growth, granular adjustments help manage cost pressure without forcing a sudden, large increase that might shock customers.
• Small, incremental increases also tend to be easier for customers to absorb. They reduce the risk of significant churn or pushback because the change feels gradual rather than abrupt. This approach, which involves continual price alignment with evolving customer usage, is discussed in our book as a way to stay in tune with the market and underlying cost realities.
• That said, every market and customer segment is unique. In environments where customer contracts are longer or where pricing adjustments are less logistically feasible, larger, less frequent increases might be the only practical option. The book emphasizes aligning your strategy with the specific dynamics of your target market and the nature of your underlying costs.
In summary, Price to Scale suggests that when possible, opting for small, frequent price increases can provide a smoother transition for customers and better align your pricing with both value and cost dynamics, reducing the risk of customer friction. However, it's important to carefully evaluate your customer base and cost structure to determine the best approach for your specific business.