How to successfully change your pricing strategy without hindering growth?

A change in your pricing strategy exposes you to the main fears of SaaS CEOs:

• hampering acquisition ;
• increasing churn ;
• losing visibility.

How to overcome these challenges and succeed in your transition? Practical advice from Lucas Bédout (CEO of Hyperline) and the experience of Gilles Bertaux who recently implemented a strategic change at Livestorm.

Changing your pricing: what are the stakes?

Addressing the right message to the right customer

To successfully transition your pricing without losing your existing customers, Lucas and Gilles emphasize the importance of addressing the right message, particularly by segmenting your user base into 3 pools:

• Tier 1: For customers you want to retain, favor the implementation of a nurturing strategy and enhanced support.
• Tier 2: For loyal but slightly less profitable customers, consider sizing your marketing strategy based on your internal resources.
• Tier 3: For less profitable or new customers, you can make a more spontaneous pricing change. This last pool is also the ideal target for testing your new pricing and observing reactions.

The most important point highlighted by Gilles is to determine the acceptable price/value balance to satisfy customers who want to continue using your product. If your new cohort of customers grows faster than the decrease in the old one, then your transition is probably successful.

"The problem is not churn, it's the bottom line," says Lucas Bédout.

Changing your pricing: how to increase perceived value?

Your price change inevitably impacts the perceived value of your product. Livestorm chose to move towards a more premium positioning to strengthen its brand image and succeed in its transition.

"How can we create even more value in everything we do to justify the budget line we choose?" says Gilles Bertaux.

Gilles and his team activated 3 levers:

• service quality (enhanced customer support);
• the development of add-ons, which increase prospects' perception of added value to the product;
• the product scope with a repositioning to gain competitiveness.

A pricing variation therefore influences your overall strategy: the product itself, the work of the sales team, the marketing approach and even the target market.

Essential KPIs to track during a pricing change

Gilles has highlighted a few metrics he recommends tracking to successfully navigate a pricing transition:

• The evolution of ARPA (Average Revenue per Account) and ARR (Annual Recurring Revenue) are the first evaluation indicators after a price change. Their growth over several consecutive months is generally confirmation of the success of the transition.
• CLV (Customer Lifetime Value): This KPI measures the total value a customer generates throughout their relationship with your product. A pricing change can directly influence retention and upselling.
• Gross margin: The gross margin allows you to observe the direct impact of the price change on the profitability of your solution.
• Soft input metrics: In parallel with these indicators, it is useful to track the conversion rate at each stage of the sales pipeline. This makes it possible to better understand the behavior of prospects following a price variation.

Finally, segmenting your revenue by plan, product, or customer type to detect specific patterns is generally very informative, as are cohort analyses to measure the impact of price changes on medium-term retention.

Deep Dive into Livestorm's pricing pivot

Livestorm recently underwent a significant shift in its pricing strategy. This change was the culmination of three years of work aimed at addressing new challenges related to margins, competition, and flexibility.

The platform now deploys two complementary sales funnels: a self-service funnel and a sales funnel. Gilles and his team's primary challenge was finding the right balance between these two channels to prevent them from cannibalizing each other.

Livestorm has completely redesigned its pricing grid based on field feedback. They now offer commercial contracts with a unit price, and it's working:

• The sales team (AEs, AMs, CSMs) is responsible for closing annual and multi-year plans.
• The self-service funnel relies on an automated process that satisfies customers seeking autonomy.

A comprehensive offering that allows Livestorm to address a larger market and meet the expectations of different prospect segments.

The challenge of Self-Service at Livestorm

Self-service represented a significant challenge for Livestorm. Indeed, Gilles and his team had less direct control over this type of customer, and approximately 25% did not accept the price increase, which inevitably led to an increase in churn.

To mitigate this impact and evaluate the effectiveness of the strategy, Gilles shared two key recommendations:

1. Segment follow-up analyses based on different customer types to obtain a comprehensive overview of the impact of the implemented strategy.
2. Implement proactive communication at least six months before adjusting prices, accompanied by a clearly defined forced migration plan.

Gilles Bertaux's tips for a successful Pricing change

We also had the opportunity to discuss the challenges inherent in transitioning pricing models, which Gilles recently managed at Livestorm. Here are his 3 key tips to maximize your chances of success in these transitions:

• Refine the wording of communication emails and simplify the message: It is essential that emails are clear, concise, and easy to understand. A message that is too complex risks confusing your customer base.
• Gather customer feedback to manage feelings of injustice: Actively soliciting feedback allows you to better understand frustrations and adjust your strategy and communication accordingly. This is essential to mitigate perceptions of unfairness and strengthen customer relationships.
• Promote predictability by tailoring communication to customer needs: For example, large accounts often need long-term price visibility to better anticipate and plan. Providing this transparency reassures customers and facilitates their acceptance of change.

To go further and capitalize on the advice of Gilles and Lucas, watch the full webinar replay.

To successfully implement a pricing change, you must find the right balance between price adjustments and maintaining customer satisfaction. Anticipation allows you to make this transition a real growth lever and strengthen the company's market position.

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