If you're doing SaaS and discovering your price is too low, do you raise your price grandfather in your current users for a certain period of time?
Conversely, if your price is too high, do you lower your price give your current paying users freebies (an extra month or two) for paying at the higher price?
I know at the very least I'd want to avoid another ZenDesk situation (http://news.ycombinator.com/item?id=1357592); having happy customers seems very important. Obviously there's a certain point where one needs to cut bait, though.
I'm in the "Grandfather Everybody in at their current price" camp on this one. It gives you a ton of upside, and not much downside.
Grandfathering somebody in at a low price messes with their head in a good way. Suddenly, they're getting a better deal than everybody else. They're saving money. Hell, they're making money every month they keep that thing. No way anybody's going to make them give it up. They earned it by being an early adopter.
I did this with S3stat when I raised the price from $2/month to $5/month. Here it is a year later, and most of those two buckers are still around. Attrition is fairly high among the five dollar camp, but the early guys are holding on to their cheap subscriptions like they were gold.
Better still, when their credit card expires or they accidentally cancel their account, I get to send them this email:
Looks like your card expired. Head over to S3stat.com when
you get a chance and reactivate your account. It looks like
you were on our old $2/month pricing model, so that's what
we'll set you back up with when you reactivate.
... Six hours later, I generally get a little ping in my inbox telling me I've gained a new "Legacy" subscriber.
So sure, there's a downside, in that you miss a chance to convert those folks to the new pricing model. But in doing so, you'd need to factor in the immediate loss from a percentage of them simply saying "No. It's not worth that much to me", plus the even scarier "What? I'm still paying for that??? Thanks for reminding me to cancel", as well as the long term higher attrition rate from people who aren't eternally grateful to you for giving them such a good cheap rate while you're charging everybody else more.
I think that about sums it up. Grandfathering: good. Not Grandfathering: possibly bad.
Comments
If you're doing SaaS and discovering your price is too low, do you raise your price grandfather in your current users for a certain period of time?
Conversely, if your price is too high, do you lower your price give your current paying users freebies (an extra month or two) for paying at the higher price?
I know at the very least I'd want to avoid another ZenDesk situation (http://news.ycombinator.com/item?id=1357592); having happy customers seems very important. Obviously there's a certain point where one needs to cut bait, though.
I'm in the "Grandfather Everybody in at their current price" camp on this one. It gives you a ton of upside, and not much downside.
Grandfathering somebody in at a low price messes with their head in a good way. Suddenly, they're getting a better deal than everybody else. They're saving money. Hell, they're making money every month they keep that thing. No way anybody's going to make them give it up. They earned it by being an early adopter.
I did this with S3stat when I raised the price from $2/month to $5/month. Here it is a year later, and most of those two buckers are still around. Attrition is fairly high among the five dollar camp, but the early guys are holding on to their cheap subscriptions like they were gold.
Better still, when their credit card expires or they accidentally cancel their account, I get to send them this email:
... Six hours later, I generally get a little ping in my inbox telling me I've gained a new "Legacy" subscriber.So sure, there's a downside, in that you miss a chance to convert those folks to the new pricing model. But in doing so, you'd need to factor in the immediate loss from a percentage of them simply saying "No. It's not worth that much to me", plus the even scarier "What? I'm still paying for that??? Thanks for reminding me to cancel", as well as the long term higher attrition rate from people who aren't eternally grateful to you for giving them such a good cheap rate while you're charging everybody else more.
I think that about sums it up. Grandfathering: good. Not Grandfathering: possibly bad.