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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, the ideal approach isn’t simply to let customers remain on their old plan forever or force everyone to migrate at once. Instead, the book recommends a more nuanced, segmented strategy. Here are the key takeaways:
• Segment Your Customer Base:
As discussed around page 245 of Price to Scale, different customers have varying usage patterns and negotiated terms when they signed up. Instead of a one-size-fits-all decision, assess how frequently customers use the product and what discounts or features they initially received.
• Offer Tailored Alternatives:
The book advises being upfront about pricing changes. Offer alternatives such as an upgraded version for the same money or a discount that’s tied to a commitment (e.g., a longer contract or additional add-ons). This makes the transition smoother rather than a rigid, all-or-nothing migration.
• Create a Separate, Distinct New Lineup:
Instead of simply discounting existing tiers, design a new set of packages that highlights the enhanced value in the new pricing structure. This helps make the difference clear and encourages customers to eventually opt into the upgraded service, rather than profitably relying on an outdated plan indefinitely.
In practice, you might consider grandfathering existing customers—but with plans to transition them over time through targeted upsell bundles or incentives. This method ensures that you’re not penalizing your loyal customers while gradually aligning your pricing with future product value and market expectations.
In summary, Price to Scale suggests using a segmented, customer-focused strategy that balances loyalty with the need to upgrade pricing models over time. This approach not only preserves customer goodwill but also helps avoid the pitfalls of price cannibalization in the longer run.