How to grand-father legacy pricing customers to new pricing
Most SaaS based organisations will go through multiple iterations of pricing during their lifetime. This means, you are looking at customers base on different pricing plans and with different product plans.
To make sure that everyone is on a single pricing plan, you might need to migrate your legacy pricing plan customers to newer pricing, this process is usually called ‘grand-fathering’. Needless to say, it is a delicate process.
Here are a few pointers on how you can grand-father existing customers onto newer pricing.
Step 1: Communicate
It goes without saying, you cannot move all legacy customers to new pricing overnight. As an organisation, you have a responsibility to communicate the plan to your existing customers.
Send out multiple emails to your customers and try to get their acknowledgement on making the move to newer pricing. If emails are not working, try and get on the phone with them.
The goal is to genuinely communicate with your customers as opposed to going through the paces before you switch them over.
While we are a huge fan of the TLDR (Too Long Did not Read) philosophy, it is okay to be a little verbose in your emails explaining the move and what it means to your customers.
Step 2: Listen to customer feedback
Genuinely listen. These are customers that probably gave your product a chance when others did not. The older the customer, the more attention you need to pay to what they say. Don’t confuse attention with agreeing to everything they say. The entire purpose of listening is to make sure you can offer them a solution that they find fair.
No customer expects to keep paying the same amount for a SaaS product. What they do expect as being long time customers, is a fair deal.
In fact, a smart way of starting the grand-fathering process is to do a small pilot. Pick a small subset of customers and then work with them on grand-fathering. This will give you a very good idea of what to expect when working with a larger group.
Step 3: Don’t be greedy
While one of the purposes of the grand-fathering process, is to make sure you get all your customers on the same page with rest of your higher paying customers. As a responsible business, you have to ensure you do not end up pushing away your customers or causing dissatisfaction.
Our experience has shown, that some grand-fathering plans actually end up giving your existing customers a benefit and in some cases you might end up charging them less than what they are paying.
Step 4: Be ready to discount to keep business
While grand-fathering will give your business a boost, you cannot do this at the cost of your existing customer base. In some cases, you will have to discount on existing pricing plans to keep your customers. It’s okay to discount when your customers are explicit that they cannot afford your product.
At the same time, you also don’t want to go in with massive discounts and dilute the entire effort.
To sum up, while the purpose of grand-fathering is to give revenue a boost. It is not the only way you will boost revenue so try to be as fair as possible.