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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, the answer is that it depends on your situation—and yes, you can offer alternatives such as downgrading plans if it makes strategic sense. Here are some key points from the book:
• The book explains that for customers using only a subset of features, especially if they’re at risk of churning, a "lite" or lower-end package may be a smart defensive move to retain customers rather than losing them completely. (See pages 169 and 177.)
• It also discusses three potential options for handling list price challenges with existing customers:
- Providing higher discounts for these customers.
- Creating new list prices or packages specifically for existing users.
- Instituting explicit “no-downgrade” policies so that an existing customer is not suddenly exposed to a lower price for essentially the same product.
• In many cases, proactively and creatively offering alternatives—whether that’s a downgrading path for lower-tier usage or presenting a better-value upgrade—can align your pricing strategy with both market share and revenue growth goals.
In summary, our book suggests that offering downgraded alternatives is a valid strategy when it supports managing churn and aligning product usage with the right price point. However, the approach must be carefully tailored to your customer segments and internal objectives, making sure that any such alternative aligns with your broader pricing strategy.