Have you really thought about your pricing strategy?
Prices are the center of every subscription business, all paths —marketing, support, sales, products— drive or reinforce that page, and if you're improving everything else, you should also be improving your prices.
If you have a recurring revenue business that continually sends updates and invests heavily in market launch activities, you need to go beyond acquisition and retention and start seeing monetization as an equally enabling growth lever.
Recognizing that your prices need to be looked at with new eyes, and boosting customer and market research to refine that outlook are the hard parts. That said, you'd be surprised how many companies drop the ball during the last mile of implementation.
Here's a list of things you need to make sure you've scored before launching a price change —so you're not one of those companies :(
1. Perform a new value analysis
It is easier to digest a price change when there is a tray of great product enhancements to chew. How do you justify an increase in your prices? You increase the perceived value with it. Any significant change in prices is a good opportunity to re-evaluate your entire understanding of the connection between actual and perceived value. Value analysis involves some guesswork, some input from product teams and, most importantly, comments and usage patterns from your customers. Are they telling you that 'it's too pronounced a jump in the cost of a single function'? Are most of them forever in your freemium without ever raising the price level? Listen to these signals and immerse yourself in more research.
2.Discuss the consequences of impact analysis
In any decision-making process, a full impact analysis, as defined by Bohner and Arnold, should be a two-step activity:
Identifying the potential consequences of a change: This is quite simple. Make a full summary of all the risks involved depending on the route you take, whether you take "grandfathering", "grandfathering" for a grace period, or "no grandfathering". Look at NPS scores, see if your customers will stay with you or leave you.
Estimate what needs to be changed to make a change: Establish the numbers of income you're trying to achieve. Let any price experiment you do be in tune with that goal. Find out how to measure results. Looking for 25% growth in H2? Then you need to measure how your price change is contributing to reaching this goal month by month. Are you moving up a notch? Next, you'll need to learn more about how the new target segment perceives your new price level.
You realize what's going on. Write the biggest goal and work backwards. Make a map of how your price experiment is going to bring you closer to that goal and define the KPIs to measure your success.
3. Don't forget the most important page on your site.
Your pricing page should reflect your most recent prices at any time. If your price change involves a change in the value metric, communicate this clearly on the page. Back up with frequently asked questions about what the value metric means. If you think you need a full restructuring and design page, read this post about dismantling what should be a good pricing page, along with examples.
Never test A/B on your pricing page to plot the metric. Any change in the pricing page should be the final step of your experiment, not the first.
4. Order your team's internal communication
Pricing decisions aren't made overnight. Deliberate discussions go into it. If the seller who is receiving a call with a clue is blind about this, there is a possibility that what was decided in that price discussion room was not what was communicated in the call. Create a book of answers for your sales, support and success teams.
Depending on the type of price change, equip your internal teams accordingly. If the change is the inclusion of a new, more costly level, then training your sales teams and customer success to present this new plan to existing customers and new target audiences should be on your checklist.
If this is a price localization experiment, then document the changes in the process that each team has to follow; the step-by-step actions to allow multicurrency in your tools along with the people you need to consult with before making certain decisions.
5. Customers come first, customers know first
Stealth mode is the way to go when you're fighting crime in a superhero suit. Not so good for price ads. With or without acquired rights, customers need to be given an exclusive look at least a month before the price change. Even if the changes don't affect them, it gives them a deadline to move to a higher level with the previous price. It's also a good way to incentivize old tracks.
A good price change in the email should:
Be transparent and clear about why you are doing it, how it affects your customers/prospects and when the changes are activated. Remember that there is room to reactivate old emails; boost the urgency by attaching a CTA to "buy now" so you can enjoy the old price.
Ask for feedback. Whether this experiment has been improvised or worked on systematically, you can now validate the price with a larger audience.
Have a tone of absolute security. Your clients need to know that they can contact one of your executives at any time to understand how this price might affect them. Make sure your support team is available to customers at all times. To avoid redundant explanations from your support team, you can choose to write a blog explaining how your new prices will affect customers and the raison d'être of the decision.
6. Grandfather in pricing for existing customers and maintaining loyalty
On the surface, in customers with acquired rights it might appear that you are giving up revenue. But if you look deeper, you'll understand that you're saving it. Churn is one of the metrics that determine the health of a business.
Grandfathering ensures that this metric is not suddenly increased. Ideally, you should protect your customers forever, but you can also consider protecting them with a grace period of a minimum of 2 years.
Since rotation is out of the picture, being attentive to visits to record the conversion metric before and after the price change is very important.
Keeping to the existing price for customers is a definite rule to follow.