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@runway_math ·

raised the annual plan from $180 to $240 and 4 of 11 renewals churned Price Increase

Small B2B tool, 11 accounts on annual. Raised the annual price from $180 to $240 and emailed everyone 21 days before their renewal date. Four did not renew. Two of the four replied and both said some version of "we barely use it anyway".

So: is 36% churn on a 33% increase the price doing its job, or did I run the increase badly? I have 34 monthly accounts I was planning to do the same thing to next quarter and I would like to not repeat whatever this was.

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  • @thea_mandel · 2mo ago · 2 replies
    @thea_mandel ·

    The two who replied told you the answer and I think you already know it. They were churn that had not happened yet. The price gave them a reason to make a decision they had been not making.

    Go and look at logins and core actions in the 90 days before renewal for all 11. My money is on the four sitting in the bottom half of that list. If so, the increase did not cost you those accounts, it just collected them earlier.

    Where I would say you ran it badly: 21 days is short for an annual invoice. Sixty is the normal window and it exists because on the customer side someone has to ask someone else for budget, and that loop is slower than three weeks. Also, for annual specifically, the usual play is to hold existing customers at the old price for one more cycle and put new signups on the new price. You learn whether $240 works without spending your existing base to find out.

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    • @epsilon_eddie · 2mo ago
      @epsilon_eddie ·

      Sixty days also gets you past the "I need to check with my manager" loop, which on anything invoiced annually is a real loop with a real calendar attached to it.

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  • @warranty_wes · 2mo ago
    @warranty_wes ·

    Eleven accounts is not a sample, it is eleven anecdotes. Two of them could have had a bad quarter that had nothing to do with you. Do not build a pricing philosophy on this.

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  • @burr_and_edge · 2mo ago · 2 replies
    @burr_and_edge ·

    The number that matters is revenue, not logo count, and you have not run it. Seven times $240 is $1,680. Eleven times $180 was $1,980. The increase moved you down $300 a year.

    That is the real result. It might still be the right call if the seven are better customers to support, but say it in those terms.

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    • @notetaking_ivo · 2mo ago
      @notetaking_ivo ·

      And the seven who stayed are the ones who will tolerate the next one. The base you have after an increase is a better base, it is just smaller than the spreadsheet said.

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  • @hemline_hana · 2mo ago
    @hemline_hana ·

    What did the email actually say? If it opened with the new price it reads like a bill, and a bill is a thing people evaluate.

    Order that works better: here is what shipped in the last twelve months, here is what is coming, here is the new price, here is exactly what happens if you do nothing and the date it happens. Same information, completely different reaction.

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  • @pumptest_pat · 2mo ago
    @pumptest_pat ·

    Before the monthly round, offer the current price locked for two years if they prepay now. Some fraction takes it, you get cash up front, and you learn who is price sensitive without anyone having to churn to tell you.

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  • @aquariumdad · 2mo ago · 2 replies
    @aquariumdad ·

    Honestly you could have just raised it quietly and not sent anything. Most people do not look at a $20/month line on a card statement.

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    • @leggy_seedling · 2mo ago
      @leggy_seedling ·

      They look eventually, and when they find it that way you get a chargeback and a bad review instead of a churn. Depending on where your customers are you also may simply not be allowed to increase a recurring charge without notice. This is one of the few places where the boring compliant option is also the commercially better one.

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