Uncomplicate – How to get pricing iterations right

Uncomplicate by Freshworks brings you crisp and insightful videos which will focus on answering one tactical question around sales & marketing, support & collaboration, employee engagement, and growth.

Pricing iterations are not easy for businesses. Pricing changes are met with a lot of resistance, and throw your sales processes into chaos. But should that stop you from going through a pricing iteration? Definitely not, says Krish Subramanian, co-founder & CEO, Chargebee. 

Pricing iterations are pivotal in helping you find the right product-market fit, and it typically takes companies around three years to find the ‘right’ price point. 

The challenge comes with how you handle the dichotomy of customer happiness on one side, and then the need for pricing iteration for a scalable repeatable pricing model for your business on the other side. “That is where the friction comes in, internally, in the organisation in terms of what the right thing to do is” says Krish. 

At Chargebee, Krish has been an advocate of pricing iterations and using them as a growth lever. So what are his tactics? 

Transparency for the win

Being transparent is non-negotiable. “Transparency with your existing customers about how you are thinking about this pricing iteration is extremely helpful. Don’t change pricing without telling the customers,” Krish says.

When a customer buys a product, they just don’t buy a product. They trust you with helping them be better at their jobs. They buy a promise. So informing them well in advance about the change in pricing is important. 

Grandfathering prices

The golden rule of pricing iterations is to ‘grandfather’ prices. “To grandfather prices is to say that for two years, you will keep delivering more features into the into the existing plans.”

Chargebee, for instance, informed their customers about a change in pricing that was going to happen three years down the line, and Krish recalls that this went down well with customers. 

What are the advantages of this?

  • The customer is not shocked with an iteration.
  • It gives them ample time to rework their financials. 
  • It will give them time to assess the impact, the features they might have in two or three years and take a call on whether or not to remain the company’s customer.

By being transparent and grandfathering prices you’re effectively saying: “I’m not shifting the ground today for your business. I’m trying to do the right thing for in both our interests for us to build a sustainable business.”