How do you increase the price of a product without scaring away customers?
In my 4 or 5 years of working at startups, I’ve noticed that people always have a problem when they are told about changes:
– free version jumped to a trial with a subscription or lifetime purchase
– subscription and lifetime purchase prices increased
People who have already experienced a certain price (or free access) are very reluctant to pay more when they know they were paying less.
New people are more likely to jump to the newer (higher) price.
But older users usually start complaining:
– on support
– in comments under posts on social networks
– in public forums where ratings are given
How do you communicate the increase in the original price?
(e.g. do you add features to justify it, or what is your crisis communication plan that limits your churn rate and negative sentiment)
Replies
App Finder
I think there's not much you can do. There are always people people that are angry in that situation.
I made a change to App Finder a month ago so some features that had been free now require a paid plan.
Revenue increased by factor 4, Google Play rating dropped by 0.6 stars.
minimalist phone: reduce your screentime
@konrad_sx If the revenue goes up, probably it was worth taking the steps.
@konrad_sx A 4x increase in revenue is a strong result, even with the drop in rating. It also shows how sensitive users can be to changes in features they were used to getting for free. Clear communication and a transition period can probably help reduce some of that frustration.
It depends on many circumstances, but here are some ideas:
- Begin with a high price you expect to maintain. It is always better to lower it than to increase it in the future.
- Keep the low price for the existing users only, if possible. This can reward those who supported you from the start.
- Add features over time. Only raise the price when you add new features. Keep a lower price for a plan with the old features. Possibly, the new features are the answer for existing users, so many will have the incentive to upgrade.
@narcismirandes Very well defined. Gives a fair idea on pricing change and adjustment
minimalist phone: reduce your screentime
@narcismirandes I want to go with the 3rd option for sure. But first, I want to collect free users to create som buzz for Safelimit :)
I always think back to early Netflix days, their prices have more than tripled, but their subscribers have increased fifteen-fold. As an early adopter, I personally cannot stand the platform now, but somehow they have over 320 million subscribers. I cannot deny that they have increased their value financially, despite price increases over the years, sometimes twice in one year. The price increases usually come right after they have a big event (NFL, WWE, etc.), which allows users to “feel” as if they are getting more value, when they really are not. Perception is everything!
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@jason013 well, people will pay for that, because people love procrastination :)
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@askim_stucki That is fair. I think, that implementation on the backend should not be that difficult, or?
I think the worst part is when it feels like same product but just more expensive. I’d probably just give old users some time or keep their old price for a while, then be super clear about what changed. Because people usually get more upset when they feel trapped than when the price goes up itself
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@tsiriniavo_rabemananjara yeah, probably they wouldn't stay if (besides price) nothin else changed :D
Most of the complaints you list come from a price that changed after somebody had already been told the old one. So the version I chose is to put the rise into the offer itself, before anyone has paid.
Our launch price is set per hundred paying customers. The pricing page says how many places are left at the current rate, and after each hundred the rate steps up, four times, and then it holds. Nobody who buys at the first rate was promised it for ever, and nobody who arrives later was shown a lower one. I should say plainly that we have not sold one of those places yet, so this is a design, not a result.
The second half is what a rise touches. Most of what we sell is packs of invoices, and the credits never expire, so what someone already paid for stays theirs at the rate they paid. The new price only applies to the next pack they choose to buy. There is nothing to grandfather, because nothing they hold gets repriced.
One trap is where the old price keeps living after it changes. A cached page, a share card, a directory listing or a comparison page can go on quoting it, and then a visitor meets a bigger number at checkout than the one they just read, which is exactly the complaint you describe, and one we would have caused ourselves. A directory once built our tagline straight out of a meta tag. So our cached pages print only the one price that never moves, and the charge is computed from the same place the page reads.
So my answer: announce the rise before the first sale, never reprice what people already hold, and find every copy of the old number before the new one goes live.
minimalist phone: reduce your screentime
@alex_goldwyn With this strategy, it is better to start with a higher price from the beginning so I do not have to be scared from "what if" scenarios when I want to increase the price. They will pay more outright :D
Softorino 💻📲
Not my call on the pricing, but the messaging around it is usually mine. What's saved me the most heat is picking which channel breaks the news first, before a support ticket or a public review does it for us. A price change a loyal user reads from us feels different than one they stumble into while already annoyed.
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@yelyzaveta_kibets What I would like to do is to keep the same price for the loyal users. But as soon as someone cancels and then want to return... so probably new price :)
I think if you are providing more value with the increase then you shouldn't worry about it and the can market the additional features without mentioning or justifying the price increase.
If you are providing same value or taking value away (eg, product features remain the same, a feature is no longer free, etc) then you should expect people to complain.
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@hmackenzie I will see in the future in my own product how things gonna play out :D
Do you think its better to raise prices slowly or make one big price increase?
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@shivam_kushwaha16 I would go slowly for sure. And prepare them in advance :D
In my opinion transparency matters most. Explain why the price is changing by comparing the new features and benefits, clearly show the added value and expected ROI, and explain why the new price is justified. Giving existing users enough time to adjust can also make the change feel fairer.
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@aruna_polosofttech How long before it happens we should communicate that fact?
@busmark_w_nika I’d communicate it at least 1–2 weeks before the increase. For existing customers, I’d also give them a transitional discounted price for the first couple of months before moving them to the new pricing. That gives them time to understand the changes and adjust without feeling caught off guard. This is where marketing also plays a crucial role.