Best Practices in Marketing SaaS Price Increases

By Madison Taylor
November 19, 2021
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SaaS has seen a rapid increase in demand over the past two years. The pandemic has had some positive impact on many SaaS businesses, with growth in the industry expected to reach $94.9B in 2022. With the development of the SaaS industry skyrocketing, companies need to continually evolve to meet the demands. This rapid development entails frequent system upgrades, investment in additional servers, and even procuring new physical properties to house the ever-growing data centers.

Some companies may be hesitant to pass on these expenses to their consumers in fear of losing loyal customers along the way. However, as Forbes points out, consumers often perceive a price increase as an indicator of leadership in the market.

The key to successfully marketing SaaS price increases is to communicate planned increases to customers early and thoughtfully, and this can be accomplished with intentional marketing tactics.

Communicate Ahead of Time

In communicating a price increase, companies have to let their customers know well ahead of time. When customers know what to expect, they are more likely to be amenable to price increases. As a marketing strategy, early communication can positively influence customer retention.

This approach has consumer-side benefits as well. With early communication, customers know when they can expect the price increase so that they can allocate their budgets accordingly.

Make the Price Increase Customer-Centric

SaaS companies need to continuously invest in improving their systems and infrastructures to keep up with the demands. Whether video conferencing, customer success services, or cloud storage, SaaS services have to be dynamic in order to provide the best services to their customers. These continuous improvements come with a cost.

When communicating with customers, companies need to make their customers feel that price increases are warranted to continue improving on their services. When SaaS customers understand what they are getting for the new cost, price increases become a value-added conversation and an opportunity to showcase service improvements.

Communicate Directly with Customers

When communicating price increases, SaaS providers should make it as personal as possible. SaaS companies can do this through effective marketing communication, either through an email strategy or even SMS. The key here is to address customers individually.

This personal approach to communication makes customers feel that their SaaS vendors are making an effort to reach out to them individually. Connecting with customers this way enables companies to be more consumer-centric and helps the consumer feel like their individual situation is receiving attention from the SaaS provider. This does not mean every customer needs custom communication, but it does mean that your customer’s profile should be considered in crafting the messaging.

What are the problem and solution messaging details that will speak to your buyer personas and how are those aligned with service improvements and consequent price increases? These are the kinds of conversations that should precede customer communication implementation.

Allow Customer Feedback

When a SaaS company decides to implement a price increase, it may be challenging to communicate this to customers and expect a positive response. Companies must make customer feedback an essential part of their marketing strategy as this not only validates customers’ insights and feelings towards a price increase but places the customer at the center of the process.

Prior to rolling out a price increase, it may be worth considering what service enhancements your current customer base may be willing to pay more to access. Pushing out a survey about the current and potential future state of the service may be a powerful tool to help guide both service development and pricing models. Companies can also tangentially benefit from customer feedback as it presents an opportunity to look into aspects of the service that may need improvement from a customer standpoint but have not been considered yet internally.

When compared to other service-based industries, the outlook for SaaS companies is promising. Companies should not shy away from price increases to benefit the bottom line, but they should give due attention to intentionally communicating how their efforts are resulting in a better value for customers. The key to successfully implementing a price increase without losing customers is a two-way communication channel that SaaS companies can achieve through good marketing communication strategies.