Ask Us: What is grandfathering of prices and its role in SaaS

| Last Updated: May 26, 2017 |

Reading time: 1 minute

In the world of SaaS, we all strive to constantly improve our products and services that we offer our customers. If your product is consistently improving and your business is improving, but there’s no change in the pricing then you’re most probably undercharging your customers.

So what will happen to the early adopters if you increase your prices? Do you break your promise of price guarantee to them?

Well the simple answer is…you don’t!

There are numerous examples of companies out there who have gone about changing their pricing plans without a glitch or any furor.

So how did they do it? They did this by “Grandfathering”.  It’s basically changing the price only for the new customers but keeping it the same for your existing ones.

Pager Duty‘s a company who changed their prices without causing a public uproar. You ask how?

Well, they:

  • Announced well in advance that there would be a price change.
  • Did not affect the existing customers as they were grandfathered in.
  • Had options of customers on trial.
  • The price change happened without a glitch.

There are similar stories of the price change such as OfficeDrop and Jira, who all ran a successful pricing change without any fuss whatsoever and there are also tales that ring alarm bells among SaaS CEOs.

Truth be told trust factor plays a crucial role when it comes to SaaS. A bait and switch not only affects the brand but also gives you the kind of publicity you do not want. It is only fair for the customers who have been there with you since the very beginning to continue on the same plan, instead of having to pay for more than what they signed up for. Whether it is price increase or pricing experiments, they are best done when done without affect the existing customers.

Author of the post

Bhargavi P

Product Marketer at Chargebee. Coffee Addict, Music Explorer, Avid Reader, Poet.

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