For the last few years, SaaS has felt less like a service than it used to.

2023-2024 became the years of not just the aggressive price increase, but the threatening renewal conversation.  In turn, customers are trying to cut back on variable costs and vendors they don’t strictly need.

We’ve gotten into a bit of an arms race, where vendors that can raise prices, do … and those that can’t often are seeing cutbacks by customers looking to shrink the number of SaaS vendors they use.

Lost in all of this is the basic tenant of delivering more value if you charge more.  

  • Did you add a few truly compelling, new features when you raised prices?
  • Does your app do radically more than it did 12 months ago?
  • Maybe add features for new stakeholders, like analytics, dashboards, reporting, etc?
  • Did you build a much larger ecosystem for customers in the past 12 months?
  • Did you close a few key feature gaps your existing customers will really begging for?
  • Are your service and services much better?

If so, feel good about raising prices.  At least, feel better.  You can genuinely explain it, and pair some positive news with a modest increase. Folks will get it.

If not … well, maybe your expenses are up, your VCs are stressed, the markets are pushing you.  But none of that is the customers’ problem.

Add real value when you increase prices, watch a lot of friction go out of the process.

A random price increase without commensurate value increase almost always at least gets them to look at another vendor, however.  Customers aren’t stupid.  They always feel ripped off when prices go up for no reason other than to get more money from you.  It may help you make the plan for the quarter.  But is it worth it?

Also remember raising prices may raise revenue a bit, but it doesn’t fix the root cause of any growth issues. 

Most importantly, it doesn’t add net new customers.  That’s what really matters.  Go long.  Close every customer you can, put more energy there.  And less into charging the base even more.

A bit more here:

When You Raise Prices More Than a Smidge … They At Least Look At Another Vendor

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