Raise prices without losing customers

Hey Everyone,

Shopify raised its monthly prices 33% in January 2023. It was the company's first increase in 12 years. Subscription revenue grew 31% year over year, and there was no meaningful merchant churn.

The order and timing of how you roll out a price increase determines whether it goes smoothly. ChartMogul found that 60 or more days of advance notice produces 40% less negative feedback, and that customers kept on their old prices during a transition period only churn at 2-3%, compared to 7-9% when they're moved to new prices right away.

Here's a 60-day plan you can follow this quarter.

Do your plans need to change, or just your prices?

Look at how your customers are spread across your plans. If more than 60% of them are on the same plan, you probably need new tiers before you raise prices. Add a premium tier that includes your newest features, or split your most popular plan into a standard and advanced version. That way, the increase feels like paying for more value rather than paying more for the same thing.

If your plans already match how different customers use the product and you're underpriced across the board, a 5-8% price increase is simpler and faster.

Weeks 1-2: Calculate what each customer will actually pay

Pull your customer list and work out the new price for each account. Flag anyone facing more than a 15% effective increase – those need a personal conversation before you announce anything publicly.

Split your base into enterprise, mid-market, and SMB. ProfitWell found that companies pricing differently for each group see 87% less churn than those making a single across-the-board change.

We've built a free spreadsheet template you can download. It calculates each account's percentage increase and flags the ones that need attention.

Weeks 3-4: Train your team and prepare what you can offer

Every customer-facing person needs to know the messaging, the objections they'll hear, and what they're allowed to offer in response.

Instead of blanket discounts, prepare trades that give you something back:

• Early renewal at the current rate
• Multi-year commitment in exchange for a smaller increase
• Annual prepay with a locked price
• A case study or reference call in exchange for a waived increase

Weeks 5-6: Start with your biggest accounts

Call enterprise and strategic accounts personally. Follow up within 24 hours with a written summary that includes each customer's specific old price, new price, and effective date.

Mid-market accounts get a personalized email from their account manager with an offer to schedule a call.

Weeks 7-8: Announce to everyone else

SMB and self-serve customers get a CEO or founder email, an in-app notification, and a blog post with a full FAQ. Every message should state the specific old-to-new price for each plan. Call it a price increase, not an "adjustment."

Keeping existing customers on their old prices for a set period matters most here. The churn difference between customers who get a transition window and those moved immediately is the biggest in the SMB segment.

What not to do

Unity, a game development platform, changed its pricing in September 2023 and made two mistakes that cost the CEO his job within a month. They applied new terms retroactively to existing customers who had signed up under different conditions. And the new model charged customers more as their products became more successful.

The stock dropped 10%, and the pricing was fully canceled in 2024. Never change terms retroactively on existing customers, and never build pricing where your customers' success costs them more.

Try this today

Download the Price Increase Planner we've attached to this issue. Enter your customers, their current prices, and what you'd charge under the new pricing. The spreadsheet calculates each account's percentage increase, flags anyone above 15%, and shows your total revenue change by segment.

If your flagged list is short and the revenue gain is clear, you're ready for a straight increase. If half your customers are flagged, you need to rethink your tiers before touching prices.

Go deeper

👉 McKinsey: The Power of Pricing – why a 1% price increase generates an outsized jump in operating profit, and where companies lose margin without realizing it

👉 Lenny's Newsletter: Pricing Your SaaS Product – Patrick Campbell's guide to value metrics, segmentation, and setting the right price

👉 Paddle: How to Change Your SaaS Product Pricing – practical breakdown of transition pricing and communication approaches when you raise prices

Coming up on Monday

On Monday, we'll look at five questions that test whether your acquirer has a real integration plan or is making it up.

Have a great weekend!

P.S. Forward this to your head of customer success before your next price conversation. The section on what to offer instead of discounts will come in handy.