How to Avoid Common Mistakes in Software Pricing
A Clear Approach to Navigating Pricing Changes in Software
Software pricing is evolving fast — and getting it wrong can upset your customers. Companies like Canva and Unity have faced major backlash after making unpopular pricing changes. The lesson? Pricing is a powerful tool. Done right, it drives growth. Done wrong, it damages trust.
Today, almost two-thirds of SaaS businesses use usage-based pricing, and many more are starting to experiment with it. Hybrid models — combining usage-based and subscription pricing — are also becoming popular. But these changes add complexity, and software companies must handle them with care.
Here are five practical rules to follow when updating your software pricing strategy.
1. Start with Value
Whether you’re raising or lowering prices, clearly show the value your customers receive. If prices go up, explain what’s new — more features, better performance, or a more customized experience. If prices go down, the value often speaks for itself.
Always connect the cost to the benefit. This helps customers understand what they’re paying for — and why it’s worth it.
2. Take Your Time
Big pricing changes should never come as a surprise. Sudden shifts can create confusion and anger, especially if you’ve built a strong user community. Be intentional and communicate early. Give your customers time to understand and adjust.
3. Think Ahead
When raising prices, consider “grandfathering” your existing users — keeping their current rates for a while. This rewards loyalty and reduces complaints. But be honest: let them know when the new pricing will apply and what extra value they can expect.
For new customers, launch updated software pricing with new features or product tiers. Avoid frequent changes — once a year is enough for most businesses.
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4. Be Transparent
Customers are more likely to accept new prices if they understand what they’re paying for. This is especially important with usage-based pricing, where costs can quickly rise.
Give users clear tools to monitor usage, track spending, and set limits. Transparency builds trust and helps customers make better choices — which reflects well on your product.
5. Avoid Sticker Shock
A sudden price jump — like Canva’s leap from $180 to $500 for some plans — can frustrate loyal users. If you need to raise prices significantly, do it gradually.
Break the increase into smaller steps and explain the reason behind each one. Regular updates and honest communication make customers feel involved, not blindsided.
Why Software Pricing Will Keep Changing
The future of software pricing will be faster and more unpredictable — mainly due to rapid advancements in AI. New technologies are hitting the market quickly, raising competition and forcing companies to adjust prices more often.
Unlike past transitions, like moving from on-premise to cloud, these changes are happening within the cloud. That means businesses can roll out pricing updates faster, and customers expect quicker responses to their needs.
To stay ahead, software companies must focus on three things: planning, clear communication, and strategic execution. When these are in place, pricing updates become a path to growth — not a source of conflict.