Yesterday a founder friend asked how to raise prices during sensitive times.
I explained raising prices is always sensitive, so you need to do it right.
Here's the right way, including email copy we use. 👇
I explained raising prices is always sensitive, so you need to do it right.
Here's the right way, including email copy we use. 👇
First up - raising prices isn't "mean" and it's necessary. Your price is the exchange rate on the value you're providing, so if your brand, features, functionality - your value - go up, then your price should go up too. 2/ 
Sure, the safe thing to do is to keep everyone on legacy pricing, but it's not necessarily the *right* thing to do. You train customers to expect more for less, building resentment, and it's nearly impossible to go from $10M to $100M without raising prices in some manner. 3/
You need to do it right though.
GIF break. 4/
GIF break. 4/
Step one:
You need to collect data to know the level to increase - obvious sure, but you didn't set you prices right the first time (remember the meeting where you argued with your team and then just said "screw it" and shipped the price and didn't look at it until now?) 5/
You need to collect data to know the level to increase - obvious sure, but you didn't set you prices right the first time (remember the meeting where you argued with your team and then just said "screw it" and shipped the price and didn't look at it until now?) 5/
We've written a ton on this, but as @patio11 says "charge more" and you should measure just how much you can charge more. 6/
Step two:
Run an impact analysis to see the impact for existing customers. Those with a greater than 50% price increase should get higher touch communication (and maybe the price increase should happen twice over two years rather than all at once) 7/
Run an impact analysis to see the impact for existing customers. Those with a greater than 50% price increase should get higher touch communication (and maybe the price increase should happen twice over two years rather than all at once) 7/
You really can only do a straight up price increase once per year (two if you're flying). 8/
Step three:
Communication. This is going to change depending on your circumstance, but make it about them. Here's a template. Notice how we remind them about the value, position the increase as an investment for them, AND give them a discount for being loyal. 9/
Communication. This is going to change depending on your circumstance, but make it about them. Here's a template. Notice how we remind them about the value, position the increase as an investment for them, AND give them a discount for being loyal. 9/
The legacy discount is a great tactic, because human beings are psychologically more comfortable with a discount falling off a receipt than just a straight up increase. 10/
Also, the P.S. is crucial. You do this for two types of people. Penny pinchers who cause a fuss (read: me) who read this and go "well I do get the value" and then don't respond. Also, people who are actually impacted - you want them to have a rip chord to stay a customer. 11/
Lot of other details depending on your circumstance, but that's the crux of it. Keep in mind *you will lose customers* - make sure you realize that, but you'd lose customers even if you lower prices. Don't freak out. 12/
If you've done your homework, normally these folks are the not so great customers anyway and you'll see your churn rate go up a bit and then go lower than before the price increase. 13/
Ok back to my analyst cave.
If you thought this was worth at least $1, please retweet the first tweet in the thread. Want to get this knowledge in the hands of as many people as possible.
Also, give me a follow @patticus for more. What else do you want to know? /fin
If you thought this was worth at least $1, please retweet the first tweet in the thread. Want to get this knowledge in the hands of as many people as possible.
Also, give me a follow @patticus for more. What else do you want to know? /fin
