We’re thinking about introducing a new, higher-priced tier with additional features – how do we decide which existing customers to offer an upgrade to that tier, versus leaving them on their current plan?

Below is a concise answer based on our pricing strategy book, Price to Scale:

• It all comes down to segmentation. You want to identify which customers are already using the product extensively or are benefiting from more advanced features. These customers are a natural fit for a higher-priced tier because the new features align with the way they use the product.

• Look at historical pricing and usage patterns. Our book explains that customers who originally negotiated deep discounts or were sold on a basic package may balk at a sudden jump in list price—even if they could benefit from advanced features. In contrast, those who are already paying a reasonable average unit price and using lightweight features might be better suited to try the upgraded offering.

• Consider tailoring the upgrade process. For customers with a substantial usage history or those who use premium functionality, proactively offer an upsell that not only adds new value but also rationalizes a higher price point. For other segments, you might introduce incentives like a temporary discount or deferred payment options to soften the transition to the new tier.

• Overall, a careful review of each customer’s recent usage, price sensitivity, and contractual history will guide you on who to upgrade versus who to leave on their current plan. As discussed in our book Price to Scale (see sections on segmentation and customer migration), this kind of thoughtful, segmented approach helps maximize revenue without alienating existing customers.

In summary, by analyzing usage patterns and historical pricing, you can determine which existing customers are likely to benefit from—and be receptive to—the higher-priced tier while offering alternative incentives for those who might otherwise be resistant to change.