Guide: How to drive successful SaaS price changes

If last year felt a little lean for your business, you’re not alone. In 2023, SaaS growth fell to an all-time low of 16%, and we saw many companies rightsize after the SaaS boom during the Covid-19 pandemic.

With a tougher buying environment for the world of B2B SaaS, companies need to start to think of their pricing as a way to protect margins, drive customer acquisition, and maintain customer satisfaction. Pricing, when not thought of as an afterthought, is an opportunity to convert and retain more buyers, achieve higher customer lifetime value, and establish a product as a top-tier offering.

When done well, a strategic price change not only increases revenue but can also move your brand up market. Done poorly, fumbling pricing updates can anger your consumers, lose trust among stakeholders, and create chaos across your organization.

As your company grows, the market changes, and your goals and services evolve, your pricing should reflect these fluctuations. In this guide, we’ll show you how to manage internal stakeholders, garner buy-in from customers, and coordinate pricing migration without controversies or headaches.

If you’ve completed your pricing strategy analysis, held your alignment meetings, and decided on a new pricing structure but are concerned about the next steps, this guide is for you.

The dangers of poorly executed price changes

Price changes are high-stakes powder kegs that can make or break your customer experience.

For example, cross-platform game engine Unity announced last year they would start charging $0.20 per game installation after the first 200,000. This could potentially penalize companies for sales spikes and replays, as their fees would be tied to installs (instead of, for example, revenue).

As a result, game developers threatened to take down their games altogether until they could rebuild on a different engine, and there were entire communities dedicated to expressing disappointment in Unity.

The price change was met with such intense backlash that Unity had to backtrack and lost plenty of goodwill in the process.

Even if Unity finds a more agreeable pricing structure, they’ve effectively discouraged any new games from being built; few people now trust the platform that tried to spring a surprise price update on their customers.

In contrast, Unreal Engine, another popular gaming engine, announced a price change for developers outside the gaming industry. They assured their audience that their royalty pricing would remain the same (5% of revenue after developers earn $1 million), at least for game developers.

Shopify Plus has also recently raised their pricing, but they were met with praise for the approach they took. Even though they were raising their prices by a whopping 25%, they offered legacy pricing for merchants willing to sign a three-year contract.

So, what’s the difference between a pricing announcement that implodes on itself and one that reassures its target user effectively? Successful implementation.

How to facilitate a successful price increase

Now that you understand the delicate nature of changing your pricing structure, here’s how to do it well.

1. Be transparent and communicative

Good communication and message framing help customers see how a price change will benefit them. Instead of anger and churn, you encourage excitement and understanding.

Going back to our Unity example, PC Gamer published an article with the headline Indie developers react to surprise Unity engine price changes.

“Surprise Unity engine price changes” suggests that the majority of developers were not expecting or prepared for the new price change. When it comes to pricing, increases should never come as a complete surprise to your customers.

On top of that, it quickly became evident the company didn’t speak to nearly enough of their customers before rolling out their increase. If the Unity team had asked even a few of their users, they would have gathered ample feedback about their planned pricing restructure that likely would have advised against making their fees install-based; developers don’t always make money per install (consider free games for instance), so Unity’s installation fee doesn’t benefit creators at all and instead shows a lack of understanding of how their customers do business.

Their blunder underscores the importance of communicating with users both before and during a price shift.

How to do it right

Work with your marketing and communications teams to ensure all your shareholders are informed and information is readily available (and accurate) ahead of your rollout. For example:

• Update your FAQs to include the new pricing details
• Put banner notices across your website
• Send out a dedicated customer email detailing the changes
• Write about your reasoning in your blog
• Share the article on social media and your newsletter
• Add a pop-up notice in your app
• Update any help center articles that reference your old pricing structure

Work with customer-facing teams to compile a list of expected questions and concerns, then create a plan for how you’ll preemptively address them. For instance, in 2023, Zapier updated pricing for Zapier Tables and wrote multiple articles to explain how the price changes will work and ease the headache for their users.

Research industry benchmarks and trends to anticipate other potential responses to your pricing updates. If your new cost falls below or is on par with competitors, highlight that your pricing remains competitive in the landscape. If it’s higher than competitors, explain your reasons and justifications for why.

A recent trend in the SaaS industry is a general rise in pricing due to inflation, and increasing energy and cloud costs, among other effects. Salesforce announced their first price hike in seven years, Microsoft upped their pricing around the world, and CFO Dive reported that SaaS prices have risen approximately 12% industry-wide.

2. Develop strategies tailored to different customer segments

Separate your customers by impact; that is, look at how your pricing updates will affect different segments.

Each pricing structure is unique, but generally, you’ll see the following groups:

1. Customers who will immediately incur higher costs
2. Customers who will eventually incur higher costs
3. Customers who will enjoy reduced costs after the changes
4. Customers who’ve just begun to use the service and whose price changes you’re still unsure of

Depending on where your customers fall, you can strategize the best communication tactics and implementation timelines.

How to do it right

For customers who will immediately incur higher costs, provide proactive communication and support to help them make the transition such as:

• Consider giving these customers a discount or allowing them to stay on a legacy plan with the option to upgrade later.
• Offer an interim plan or longer rollout timeline to give these customers the time and space needed to make a sustainable shift.
• If you charge a fee per event, provide strategic advice and consultancy to help them reduce the number of events sent to your platform. For example, you might help optimize their process so they don’t have to run as many syncs or re-downloads throughout.

Tip: Orb shows which customers will be affected by a new pricing plan and how their fees will change. You can also migrate specific users to a new plan with just a few clicks.

For customers who will eventually incur higher costs, stay in communication and ensure the eventual changes don’t come as a surprise.

Some measures you can take are:

• Launch an in-app pop-up that explains what to expect at a glance. At a minimum, your users should understand 1) that their pricing will change and 2) when.
• Highlight the value your SaaS brings with the occasional email. For example, if you run an email marketing platform, congratulate these users for hitting milestone subscriber counts.
• Consider offering a legacy plan in exchange for referrals. For instance, if a customer refers a new user on the new pricing plan, the existing referrer would receive an additional month of service at their current pricing.
• Monitor their interactions with your customer support team and brief all customer-facing teams to mention the upcoming price changes when they chat with certain user segments.

For customers who will enjoy reduced costs after price changes, this is your opportunity to encourage retention and referrals by highlighting the additional value they gain from your SaaS.

To capitalize on this chance, you should:

• Highlight the difference between the projected costs of your old and new pricing, particularly for enterprise customers.
• Encourage referrals or upsells by demonstrating the added value your customers receive from the price savings.
• After explaining how your pricing updates will benefit them, prompt these customers to share the news within their circles or on social media.

For new customers with too little available data to predict how a price change will affect them, provide clear and comprehensive guidelines or even one-on-one outreach sessions to ensure they understand the value of your product or service.

Some ideas are:

• Offer to honor their legacy pricing plan or give discounted introductory pricing. This reduces any initial hesitation new users might have due to the price change and helps make them feel valued and confident in their decision to engage with your service or product.
• Set up frequent check-ins and communicate usage and invoice amounts so they’re aware of the charges incurred. By providing usage updates, customers can adjust accordingly and provide feedback. This also opens more opportunities and touchpoints to stay on top of consumer feedback.
• Monitor their data and usage closely to determine whether these customers will incur additional charges or savings based on your new pricing structure. Communicate accordingly based on our suggestions above.

Tip: Use Orb to uncover exact usage benchmarks, including platform access counts, payment transactions, and more.

3. Establish a cross-functional rollout timeline

Craft a game plan that includes all of the various teams involved in the price changes. Each department should be able to understand its tasks in the context of the overall timeline, as well as what other teams will do. This will also help teams prepare for customer questions and learn when to expect higher call volumes or support tickets.

How to do it right

For product-led growth teams, give your support teams ample notice about any potential influx of support tickets and calls. This gives them plenty of time to prepare and train for how to respond to anticipated queries, complaints, and concerns.

If you have larger enterprise accounts, give your account managers all the details they need to reach out to their clients personally and proactively. This minimizes potential backlash and preemptively addresses any concerns.

You should also provide spec sheets for your contacts to share with their board or other stakeholders to explain and justify the price change at a glance.

Tip: With Orb, you can automate your timeline coordination by setting up webhooks that trigger alerts at critical points of the migration. You would do this first after you’ve scheduled the migration, and then when it goes into effect.

4. Execute a gradual rollout

Instead of executing your new pricing across your entire customer base — which comes with immense risk and can ruin your company’s reputation if something goes wrong — you should implement it gradually.

An incremental change, wherein new pricing activates for small segments of customers at a time, will help you test the changes, catch issues early with a small subset of users, and give you time to pivot, if needed.

How to do it right

Write scripts every time you intend to roll out new pricing to a consumer subset. This provides strict parameters to follow and limits new pricing to only a few users instead of your entire base.

Alternatively, if you use a tool like Orb to manage your price changes, you can schedule different subsets of customers to switch to your new pricing structure on different timelines.

It’s important to note that, if you have multiple cohorts on different pricing plans, you need to communicate these rollouts carefully through your support, sales, and billing teams. Build a source of reliable information for your customer-facing teams to determine which customers are part of which phase of your rollout.

Tip: Leverage Orb’s webhooks to fire alerts to both customers and customer-facing teams before pricing migration.

Best practices for internal coordination during a price migration

Once your company is aligned on a new pricing structure and strategy, multiple teams need to get involved to drive a successful change.

Communicate customer updates among teams

On the surface, a pricing migration may look like a simple script-writing exercise. However, there are many elements that need manual input. Banking on a one-click switch can get messy, and adjusting the codebase can easily stretch from a project that takes a few months to more than a year.

You may also encounter multiple one-off changes that require the team to re-run migration scripts. Since customer relationships are dynamic and delicate, there may be status changes after a pricing spreadsheet is turned over from sales to engineering. In that instance, sales would know that a customer has switched plans, but engineering would focus on setting up that same user for their previous (inaccurate) plan.

Ensure your teams have open communication lines between them so when updates occur on the customer side, all relevant departments are notified.

Tip: Orb lets you implement new pricing without touching your codebase, helping you ship on time and on plan.

Make your internal implementation timeline visible and collaborative

Even with ample communication and precautions in place, always expect the unexpected. Your timeline should help you execute changes carefully and deliberately, with buffer time included for surprises.

We’ve often seen sales, finance, and engineering teams working off of the same pricing implementation spreadsheets, which detail the new costs customers should receive and when.

However, this approach can become chaotic if you have many enterprise customers on legacy pricing, or need to juggle different upcoming renewal dates. If you work in spreadsheets, you need to check in with the timeline and internal stakeholders often to maintain alignment.

That might look like engineering preparing a customer for a new plan, then announcing when they’ll launch new pricing for that user in a Slack channel shared with all relevant departments. If sales notices an old pricing plan in the mix, they can call it out. If customer support needs to confirm the client’s details on a later support ticket, they can search for that update.

Tip: Alternatively, you can manage this in Orb. For example, if you need to cancel a scheduled pricing migration, you can do so with a few clicks in Orb’s platform. Different teams can also check on customer statuses to see when they’re scheduled for a price change and what that will be.

Price change and migration definitions

Below are a few definitions of key concepts relevant to price changes.

Plan versioning: The process of managing different iterations of pricing over time. There should be clear and easily accessible ways to see historical pricing structures and move customers from one version to another.

Plan migration: The process of moving customers from one version of pricing to another. Successful migration involves moving all customers to the right version at the right time.

Legacy pricing: A pricing plan commonly used to retain customers during a price change, wherein existing customers will have a specific pricing structure locked in for a defined period of time.

For example, in 2014 Netflix offered existing subscribers two-years of legacy pricing at $7.99/month when the streaming platform increased prices from $7.99 to $8.99.

Wrapping up — Price changes are a powerful lever for conversions and retention

Like your business and industry, pricing is dynamic. Implementing a cost restructure must be strategic to retain customers, keep internal teams on the same page, and ensure your business value outshines the coming changes.

When done well, updating your pricing should function like a well-oiled machine, with engineering, product, sales, customer support, and marketing all aligned on the mechanics and justification of the fee changes.

By keeping your customers informed and committed to your product, you can reduce churn and, in some cases, garner goodwill referrals (particularly for anyone receiving a better deal or legacy plan in the process).

Learn how Orb can help you execute a successful, hassle-free pricing implementation.

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