Main criteria for price adjustment/increase

#2-pricing-questions
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IMPORTED FROM SKOOL
Original Post was posted by Joaquim Mitidiero on Jan 13, 2025

Hey, community.

Dealing with the (annual) challenge of price adjustment in a SaaS B2B company. Would like to know if someone could share successes and errors in choosing criteria to calculate adjustment.

So far we consider inflation rate (I’m based in Brazil), taxes variation, US dolar variation and also a score built based on product’s improvements in the last yar. Competitor analysis is a complement, but not very reliable since some make their adjustments after us.

Hope to count on the group experience to improve my strategies.

Thanks in advance!

1 Like
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Arnon Shimoni
• Jan 22

I haven’t found a really good answer to this myself outside talking to customers and seeing what their willingness to pay is.

What do they value about your solutions, what do they not value?

You should have a few hypotheses and try them out.

So many things can affect the willingness of a customer to pay (or churn) as you know…

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Oz Guner
• Jan 22

In addition to external factors that you can’t control like core inflation, foreign exchange, and competitor landscape, you might want to dive into your own company’s data to see (1) average spend on solutions, (2) discount trends, (3) compliance with discount guidelines, and (4) their overall impact on company goals.

Modeling 3 pricing scenarios (good-better-best) will guide you on what’s too much or too little. Your company goals (i.e. “I’d like to increase NRR by 10 percentage points”) will be… See more

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Garrick van Buren
• 18d

Your customers don’t care why you’ve raised prices. There’s no reason to attempt to justify it to them.

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Joaquim Mitidiero
• 18d

[@Garrick van Buren]

I agree. My search aims to structure an internal process, not a justification for the client.

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Garrick van Buren
• 18d

[@Joaquim Mitidiero]

Don’t make it about costs, that’s defensive. Make it about strategy toward a customer segment.

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Ulrik Lehrskov-Schmidt
• 13d

[@Joaquim Mitidiero]

  • Great question here.

I’m lazy, so instead of writing this out I shot you a 7min video on how I’d approach it.

[Video (7min): The main criteria for price adjustments.]

Hint: Churn rate is the main indicator you want to follow.

7:44

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Maarten Laruelle
• 13d

[@Ulrik Lehrskov-Schmidt]

A light went on in the last 20 seconds. Regular pricing increases make sense as it creates a muscle in the organization to get used to handling this. Makes complete sense, never realized :pray:

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Joaquim Mitidiero
• 8d

[@Ulrik Lehrskov-Schmidt]

Thank you for your time and wisdom. It was very helpful🙏

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I know it is a long shot - is there any chance you could reshare Ulrik’s video? Or post his main points? I’m looking into a similar scenario as we speak. Thank you!

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Let me check @julia.paskaleva! Will circle back. :grinning_face:

1 Like
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Found it @julia.paskaleva :grinning_face:

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Another gem - thank you for sharing, Ulrik and Rob!

Cracking the cohort definition is where it all starts for me.
If a company is doing this for the first time, how complex do you reckon should they make this exercise? (Versus a second timer, a regular price increase etc)
Trying to find the goldilocks approach in this maze of cohort ideas:

  • Customer acquisition timing - long term customer, higher increase
  • Product Usage Intensity - Low utilization, low increase (and invest in understanding the why behind the slow usage - low pr. Awareness or purposeful)
  • Customer size/ Revenue - larger customer, higher increase
  • Industry / vertical cohorts
  • Product maturity cohort - legacy, cohort, new/premium products
  • Mixed - usage + size , age + usage + NPS sentiment

And to add on to the value added of the product - apart form ballpark, it will vary from customer to customer depending what JTBD they want our product to solve for them and how well it actually does that.

Appreciate your perspective on this!