Loading...
Answers
MenuHas anyone increased SaaS subscription pricing by 100% and lived to tell the tale?
We've operated a SaaS product for many years and we think our pricing is too low to enable growth. I believe we need to raise our prices on all current customers and not just rely on higher prices for upgrades or new customers only. We're really serving customers and launching valuable features right now and would like to make an announcement in a couple months that the new pricing is going into force. To be fair, we plan on giving customers 60 days to decide if they want to continue service and we don't think there are any comparable alternatives to our service.
Answers
Many well-known SaaS companies have doubled their prices. I've personally worked with a few that have gone through it. In most cases, your conversion rates stay the same and you see a huge jump in revenue.
This is because people tend to under-price themselves. Also, your product improves over time so it provides more value and can support a higher price.
But don't raise prices for old customers. Grandfather them in so their plans stay the same price. In the long run, it won't make a difference to your growth since most of them will churn out anyway.
If you raise prices on current customers, you'll get a huge backlash. It gets nasty. I'm pretty sure that Zendesk tried it and had to reverse the price increase.
I highly recommend raising your price by 100% for a month on new customers. Keep a close eye on your revenue and your conversion rates. If things don't go well, you can easily reverse it and discount everyone that paid for the more expensive plan. Either way, you'll know what your market will actually support.
I can't name them off the top of my head but there are dozen's of SaaS companies who have done this. Some even went from FREE to only paid.
I would suggest the following
- Don't raise prices on existing customers unless you absolutely need to, to stay alive
- Test it first without build anything by updating your pricing page and see if there's a huge drop in conversions.
- Try starting with 50% increase first.
Just so you know, it's not about the price, it's about the value your product delivers. My rule is: How much $ do we save a company, then divide that by 3, that should be a good ballpark for pricing.
Hope that helps.
Yes, thousands of companies. This answers your social proof question.
However, what you really need to know is that due to price quality effect... it is entirely possible that by raising your prices you may actually increase volume!
I recommend doing a volume hurdle analysis before any decision is reached. How much volume can I afford to lose that the price increase will make up for? Then it is just forecasting what will happen to volume via elasticities.
Andrew at Mixergy has several interviews with founders who pulled this off. As a matter of fact, that's where I discovered Dan and Clarity.fm. And am I glad I did!
Related Questions
-
For a SaaS, I find that Stripe is not available to Indian companies. What are other Stripe-like payment gateway options for Indian companies?
there is Balanced, Dwolla, Braintree but none of them seem to work in India yet.HJ
-
Does odd pricing turn you off (e.g., $29 vs $30)?
For me personally, no. However, what you really need is a larger data set. Gumroad just did a post on prices ending in "9": http://blog.gumroad.com/post/64417917582/a-penny-saved-psychological-pricing 37signals started with prices that ended in 9: http://37signals.com/svn/posts/1287-ask-37signals-how-did-you-come-up-with-pricing-for-your-products ... but they later did research and found it didn't matter (for them). The answer for YOU will likely be to test these things for yourself on your SaaS app.JJ
-
What are the SaaS B2B expectations when paying annually - annual paid annually or annual paid monthly? Is a discount necessary (i.e. 20%)?
Most Software as a service vendors generally don't book annual deals except in highly specialized cases. Most customers prefer to be able to cancel/change anytime they choose. Also, deals done "offline" end up actually often being more trouble than they are worth to administrate especially for a $2988 ticket. Generally, companies don't view prepaying for SaaS products a year in advance as a "convenience" (to them) so if the debate is internal (not customer driven), I'd set this debate aside until it's requested by the customer. Most customers will request a discount to pre-pay annual service. Happy to talk this through with you in a call, to work through the specifics of your situation in more detail.TW
-
How important is coding knowledge in starting a SAAS business? Should I start by learning code or just get started on the idea? Book suggestions?
I started a large SaaS Company for B2B where perfection in code is as importante as it gets. So here is my advice, DON'T CODE until you know what the Saas Really is. First start understanding what the problem REALLY is. Interview people and actually spend 100% of your time doing Customer Discovery. (This sounds easy but it is a skill you'll have to develop far more important than coding). Once you understand what the problem is, come up with a value proposition. Still no code. Then make a sell. If you can actually find things already existing that you can Hack and put it together then use that. Then make another sell. If you can sell it to at least 50 people if you are B2C, or if you are B2B you should have at least 1 customer. Once you do that then start automating some parts of the solution that you have hacked and so on. But THE most important thing is to be in constant conversations with your customers and hot leads. Remember you are a customer making machine not a coding machine, the first one is where the money is. Hope this helped you, if you want to talk more about customer discovery and customer development, just give me a call.JC
-
Freemium v.s. free trial for a marketplace?
It depends on a number of factors but I'd boil it down to two key things to start: 1) What is your real cost to provide a free plan or trial? 2) Who exactly is your customer and what are they used to paying and who and how do they pay today? When you say "online workforce marketplace" it sounds as though you're placing virtual workers. If that's the case, or if you're paying for the supply side of the marketplace, the question is how much can you subsidize demand? Depending on where you're at in the process, I'd also question how much you can learn about the viability of your marketplace by offering a free version, assuming again, that free is actually a real cost to you. I was part of a SaaS project that started charging people for early access based mostly on just a good landing page (we clearly stated they were pre-paying) and were amazed at the response. I've also run a SaaS product that offered free trials and realized that the support costs and hand-holding and selling required to convert from free trial to paid wasn't worth it, this despite the product's significant average ARR. You might be better off providing a "more information" sign-up form (to capture more leads) and let them ask for a free trial while only showing your paid options. I've been amazed at the lead capture potential from a simple "have questions? Click here and we'll contact you" This is all the generalized advice I can offer based on the limited information I have, but happy to dive-in further if you'd like on a call.TW
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.