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  • Writer's pictureNikhil Kotcharlakota

Maximizing Business Growth Through Intentional Churn and Price Increase

There is a lot of hesitation, especially in SaaS, when increasing prices.

Why? Because it can result in churn.

But customer churn can be a good thing.

I would categorize churn into intentional and unintentional.

Unintentional churn is concerning, because this means somewhere along the journey customers did not see value and they decided to churn.

Intentional churn happens when you announce a price increase.

This is good for the following reasons:

  • The customers that churned are not getting enough benefit (Value - Price)

  • Not your target customer/segment

If a customer truly gets the value you are delivering, they do not churn.

Melissa Kwan Co-founder of eWebinar recently executed a price increase and it definitely resulted in churn, but it was an intentional churn.

An excerpt from her post:

Two months ago, we decided to increase prices for legacy customers starting Jan 1. As predicted, a small group of customers were very disappointed and we heard from them. Some expressed discotent after the price change, but stayed. Some congratulated us because of how much they love the product and are happy to pay more. Most we never heard from. There was some churn, but not much more than normal.

Here is one customer talking about their positive reaction to the price increase

Customer converstion with Melissa

There will always be some customers that are not happy with the price increase, but there will be customers like Michael Ashford who understand the value of your product and completely agree with the price increase.

Best practices to execute on price increase:

  • Clear communication of price increase and the date of the increase

  • Evidence and support of increasing value delivered

  • Continuation of more value being delivered through features or improvements coming down the line

  • Most importantly holding the line where there are some disgruntled customers

Parting words, Intentional Churn is good!


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