We're rolling out a new pricing model. How do you drive adoption from your existing customers when pricing variables change?

This is one of the more complex areas of rolling out a new pricing model. It's important to make sure that you understand the impact of any of the pricing changes to existing customers. Are you changing any capabilities that are available to them? Are you giving them more? Generally, you shouldn't and in many cases contractually can't take any thing away. If you are giving them more is the incremental stuff that you are giving them valuable to them? Is it worth the potential price change (to them)? If you are in a SaaS/Subscription world, you may be limited contractually on if and how much you can change their price. Generally, you'll need to decide on when to execute the price changes for existing customers. Usually, the renewal period presents a natural place to implement a pricing change for existing customers. It provides an opportunity to talk about new things and sell the value around what you are delivering to justify the price change. It's important not to alienate your customers during a big pricing change, so you need to consider 'grandfathering' existing customers for some period of time on their existing pricing model/price point.

Few things to consider:

1] Your customer comms plan - when are you letting your customers know? Are you giving them a head's up? Are you letting them know why pricing is changing - e.g. new functionality that's drvcing additional value

2] Your internal enablement plan - for all teams that will be impacted - Sales, Ops, the folks who handle quoting, etc.

3] Arming your sales team - to explain pricing, handle objections, etc. 

4] Do you have a grace period for existing customers? E.g. new pricing won't come into effect until x months after launch

Any pricing change will cause confusion with both your Sales team and customers, so you'll need to keep an ear to the ground and react accordingly. One thing you could do before a big rollout is run the new model by a few trusted partners and customers to get their feedback and figure out major concerns/obstacles that you have not accounted for. 

Congrats and Godspeed! 

Rolling out a new pricing model is exciting, and often is done with the future of your company in mind. New markets, new buyers, a lot of fun!

But existing customers are your present and your past. Be careful about rolling out the same changes to your existing customers. Treat existing customers as special.

The following is an excerpt from my book, Price To Scale.

"Often applying the same rules to existing customers as new customers can result in difficult expansion and renewal conversations, especially if existing customers have historically been given special treatment (lower rates, more services, etc.) 

You may want to consider creating special upsell bundles or a granular feature menu only for current customers to buy from to ease natural, upsell transitions instead of creating all-or-nothing propositions that current customers may shy away from.

1. Suppose your customer base broadly has a singular package that was sold historically, and you are now introducing graded packages. In that case, it might not make sense to make customers upgrade to the most elite tier before they can buy the add-on applicable for that tier, because in most cases the upgrade + add-on cost will preclude the upsell from even happening in the first place. This is where a special upsell feature menu might help.
2. Suppose your customer base is especially large in size based on annual revenue, e.g., in companies >100M ARR. In that case, you could also consider mapping customer sizes to the new graded plans and providing an incentive to move to the new plans (often a higher discount or deferred payment). If the pricing change is at a place where you are compelled to make this a companywide change with customer migrations, then it will undoubtedly become its own project and should be treated as such -- and not part of the initial pricing rollout."

This is a great quesstion. And a tricky one. The key is to first segment your customers - and determine how you want to communicate, and what you want to communicate, to each group. For example, you might have long time customers on your legacy pricing that you want to give them extra time to make the change - or some type of discount/incentive to do so faster. 

The next step is to prepare what your communication to each cohort of customer will be. And try to make it very simple, showing them what new great benefits they are getting on this new model. You need to show them "what's in it for them." And then determine how the communication will come - via the AM, CSM, email from someone at your company etc. Some cohorts might require 1-1 touches, whereas others an email sequence followed by CSM outreach might be sufficient. 

Lastly, make sure you give customers time to make the switch. There's nothing worse than having to change to something brand new within 2-3 months when you have other things going on. 6-12 months is a good rule of thumb -- or you can use renewal dates to keep things simple too. 

In terms of adoption, that's where I lean on your customer success team to be great partners to their customers. And share best practices and customer examples of how other customers are benefiting and adopting it. 

Education, education, and more education!

Adoption takes time and education. Many companies plan for a pricing rollout by writing an informative email, which drives awareness of change but not adoption.

Some key tactics to drive adoption from your existing customers when pricing variables change:

•  Leverage in-app messaging on how variables have changed in context to the announcement (e.g., modals, tooltip, banner, etc.) to drive targeted education of changes and increase adoption. Track the performance of adoption tactics and document them to help inform future communications. Tip: Consider A/B testing alternative approaches to understand how channels and messaging impact adoption.
•  Trigger follow-up messages via email or in-app that support your initial announcement as your existing customers perform an action or complete a task related to the change. Tip: Triggered messages can make your message more relevant to your customer base and help connect the dots (e.g., the variable has changed from X to Y and the impact to you is the following).
•  Interview existing customers who did not adopt/embrace changes and understand what information could help them be more receptive to changes and where they would prefer to learn from them. Tip: Understanding areas of confusion and how customers prefer to learn about changes can help optimize your communications and increase adoption
•  Trigger a quick survey to assess awareness of variable changes and collect customer feedback. Tip: Usually, open responses in these surveys help inform additional content needed to drive adoption strategy.

I assume this new pricing model often comes with packaging changes. My hot take (maybe not so hot) is that packaging is much more important and impactful than your dollar price. If you’ve implemented a change in pricing and packaging, use the changes in packaging to drive adoption and upsell. Maybe there’s a new feature on the new plan types that you know customers want, you can use that to encourage them to adopt the new pricing plan. Maybe there’s more power available to them in the next plan up that you think is highly valuable for them, focus there. Can often be convinced to spend a little more if they feel they’re getting value and getting the conversation out of price and into value is the best way to get folks to get over sticker shock and focus on the needs of their team.

To drive the adoption of a new pricing model from your existing customers, you will need to clearly communicate the value and benefits of the new pricing model, and provide all available support to help customers make the transition. Some specific steps you can take include:

1. Communicate why a new pricing model is valuable for users. Clearly explain the value proposition of the new pricing model to your existing customers, highlighting new benefits and features that will make it more appealing and cost-effective for them. Tell the clear reasons for new monetization to take place. Users will more likely support your change when they understand what it's happening.

2. Provide support and education. Educate your customers on what has changed in the pricing and how it will work for them. This might include FAQs, emails from customer-facing teams, blog posts with updates (explaining all the changes) and other communication collaterals.

3. Offer incentives and promotions. This can help make the transition more appealing and less painful for existing customers.

4. Monitor and respond to feedback. React to any concerns or questions that customers may have about the new pricing model. This will help you address any challenges or obstacles that may be preventing customers from adopting the new pricing model. Also, reply to public feedback, even if it's negative.

Remember, not all customers will like and adopt new pricing. It's normal.