Kennedy: Committing to annual price increases forces product teams to ship value
James Kennedy · Episode 646 | Building a Recurring, Annual Price Increase Into Yo... · Jan 31, 2023 · at 21:57
James Kennedy, founder of ProcurementExpress, discusses how predictable recurring price hikes discipline product roadmaps.
0:00 / 0:28exact quote · 28.1s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“Increasing the prices also pushes your team say, Hey, listen, I've got to write this email next year, a better price increase. So Let's think about that. What's going to be a no brainer when I write the email about, hey, they're charging us extra two bucks a user. I mean, while they've added, you know, OCR and they've added whatever features we've got planned for the year and it focuses the mind a little bit like how Amazon did the, you know, the press release before they do a product. Like you got to imagine, okay, well, how are we going to justify our price increase this year, guys?”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from James Kennedy
Kennedy: Software's exact dollar price rarely affects mid-market purchasing decisions
“I'm firmly convinced that the actual dollar value has very little to do with the buying decision, definitely in mid-market.”
ProcurementExpress institutes automatic 5% to 10% price increases every September
“New customers to come on September, we do our price increase. We normally say exactly that. It's like between five and 10%. Last year it was eight percent.”
Kennedy: SaaS customers tolerate price increases under 20% if deriving value
“The second thing is that I think really, you know, it's a rule of thumb that no one really cares as long as less than 20%, except for one group of people, and that's the group of people that weren't getting value from your product in the first place.”
Kennedy: 5% to 15% of paying SaaS customers are inactive
“So especially, I think it's a, maybe a little secret of SaaS is that there's, you know, inactive users. It can be anything from five to 15% of your Customer base may be paying you and are not getting value from the product.”
Kennedy: Price increase churn strictly comes from customers who never onboarded
“We do have a bump in churn after we do this, for sure. It does exist, but it's always the people who were just never onboarded in the first place.”
Kennedy: Blind price increases unintentionally force shifts in SaaS customer segments
“If you're just increasing your prices and you're not thinking about it, at a certain point, you change the nature of your customers. So you might go from prosumer to mid-market, you suddenly might go from mid-market to enterprise, and then that changes how you…”