When and How to Raise Prices for SaaS Products

There are a lot of ways to raise your business revenue, but at some point, to keep your business running, you’ll need to increase the price of your SaaS product. Not only will this help you increase your income, but it will also give you a competitive edge in your business.

This article consists of two parts: how to know when the time has come to raise prices, and how to do it in a less painful way for your customers.

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When Can You Increase Your SaaS Price? 

Here is our list of the major signs to bump the prices up. If you can apply at least one to your SaaS business, you know what you should do.

1. Customers advise you to increase rates

It may come as a surprise, but sometimes customers may tell you how underpriced your product is. If you’re getting feedback from your users, and they use the word ‘cheap’, and talk about what a deal they’re getting with your product, mentioning how they prefer you instead of paying double or triple the price for another solution, that is one of the biggest signs that you need to review your pricing.

2. Users never negotiate prices

If potential customers never try to negotiate for better prices, it is high time to raise them. Software buyers are supposed to negotiate, especially when it comes to procurement by bigger companies. When your sales team rarely uses the authority to negotiate prices, and your business proposal gets comments from prospects on everything except for the price, you are not getting as much money as you could.

3. You added new features

New features, especially those that prove valuable to users, are a very good reason to raise your pricing. Don’t make it a habit to provide new features for free. You have invested in advancing your product capabilities, so it’s only fair for you to monetize it. Trust us, customers are willing to pay more for your software if they see the added value of it, and if it facilitates their lives even more.

4. You have high demand and high ROI

When the demand for your product is overwhelming, that means people enjoy your product. It’s also a sign that they are ready to pay more for it. You create a high ROI and your product offers great value to your customers and increases your customers’ revenue. Your product is much needed at the time, or you have created something we all have been waiting for for years. It’s time to increase prices.

5. You haven’t changed prices for years

Bumping prices up at least once a year is not only about leaving money on the table, but also about how customers perceive low-priced products. People tend to assume that a way-too-cheap product means low quality, or that it has less beneficial features in the plan when it comes to software. Not raising prices for over a year will put you further and further behind the competition.

How To Increase The Price Of Your SaaS Product?

1. Communicate and Justify

Communicate the true value of your product to explain and justify the price hike for your users. In your message to customers, emphasize selling the value your product provides for your users more than the fact of increasing your prices. 

Also, help your customers understand why you’re raising your prices, tell them how it will affect their current subscription plan, what benefits or discounts they can get, and communicate that you are ready to answer all their questions. As a result, most of your customers will gladly continue using your software and readily pay the new price.

2. Raise Price for New Users Only

One of the best ways of raising prices for your software is to raise them for new users only. You can choose a particular number of users who were the first ones to use your SaaS product, like the first 5,000 users, and never increase their rate. Or you can use the grandfathering method to keep prices for your current customers while applying a price raise for all new customers that sign up for your software. Don’t forget to inform current users that the rates for new customers will increase, but the prices for them will not change.

3. Restructure Subscription Plans $-$$-$$$

To raise subscription prices without upsetting your users, you can restructure subscription plan pricing tiers. It will allow your users to choose from different options regarding value and price. Users who don’t want to pay more can choose to downgrade to continue paying the same price but with fewer features. And those who value the current set of features will be willing to pay the new price. The biggest benefit of restructuring the plans for your customers with the price raise is that it gives users options, and they feel like they have control of their pricing levels.

4. Give Time to Buy at Old Prices

Always pre-announce a price increase. By doing that, you create urgency with customers and prospects, so they will know they should subscribe or renew the contract fast to lock in their rates before the prices go higher. Also, add incentives to help people see the price increase as an opportunity. Provide a time window in which they can commit to getting a discount if they upgrade to a better plan.

For example, if they commit within 15 days, they could get 15% off a better plan than they have now. Or let them refer a friend at the original pricing in the time window.

Also, you can implement Comfi to have an incentive for users to stick with you despite a price rise. Being a Buy Now Pay Later service, Comfi provides your customers with a payment method that allows users to split the annual subscription cost into 12 interest-free tranches over 12 months. Comfi pays you the whole sum upfront within 7 days. 

Comfi helps you promote upgraded subscriptions by offering users annual plans, including discounts and benefits, with the convenience of paying monthly. With Comfi, your MRR turns into ARR.

Check if It’s Time to Raise Prices

Of course, you will anger some users and get some customer churn. But done right, your revenue will boost like never before. With a well-thought-out and executed price increase plan, raising your rates can go smoothly, and your customers will be happy. Make your users choose upgraded plans even during price increase times by using Comfi as one of your payment methods.

Choose a price-increasing strategy that suits your business best and don’t be afraid to implement it today!

Let’s talk your revenue together

Amal Abdullaev

Co-founder at Comfi

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