Raising SaaS Prices For Legacy Customers Intro

Back in 2011, we launched BrightGauge with a pricing model that made sense for the product we had at the time. As with any software product, the technology and product has evolved and changed, so in mid-2012, we developed and implemented a new pricing structure which more accurately reflected the new solutions we had developed.

At the time, we decided not to fold any of our original customers into the new pricing structures, but continue to honor the terms of their original contracts. Essentially, we "grandfathered" our legacy customers into the new pricing structures. Now, as we are entering a new year, we are taking a look at the legacy plans and evaluating whether or not we should migrate these customers into our new pricing structure. This is one of the most difficult decisions I've wrestled with during my software career.

No one likes a price increase, and most legacy customers would see an increase of between 40 and 100%. Our data indicates however, that these same customers are receiving between three and four times more value from the product than they were receiving upon their initial investment. Our challenge was two fold; what to do with our legacy customers, and how to communicate any changes to the pricing structure to them. After delaying the discussion for almost a year, we finally decided to address the issue of our legacy customers. I'm torn about the options, and the mental tug o' war in my head is constant.

On one hand, if we increase the price of our product for our legacy customers, it would represent a big growth in revenue, which we could then reinvest in both product development and manpower in the new year. Additionally, I know that it's not fair that legacy customers receive all the new, enhanced features of our product at a much, much lower cost. On the other hand, these customers have been with us since the beginning. They have been with us the longest, signed up early, and weathered the roller coaster of our early years. Shouldn't this loyalty and leap of faith be rewarded?

My mental battle continues, but we're are beginning to talk without legacy customers to gauge their reaction to any potential changes over the next few weeks. There will be much more to follow on this topic soon.