SaaS Pricing Too Low: How to Raise It Without Triggering Churn
B2B SaaS founder at $29/month discovers low pricing signals low value and attracts customers who churn
Underpricing Signals “Cheap,” Not “Smart”
You launched at $29/month. Seemed competitive. Easy to say yes to. Lower than most competitors.
Now you have paying customers. $18K MRR. But you can barely afford support. The marketing budget is nonexistent. Users describe your product as “cheap.”
You know you’re underpriced—competitors charge $79, $99, even $149/month. But you’re terrified. Raise prices, and customers leave. You can’t afford that churn.
So you stay stuck. New customers at $29. Can’t invest in the product. Can’t hire support. Can’t grow because you can’t afford to serve who you have.
Over 70% of B2B SaaS founders under $50K MRR are underpriced and paralyzed by churn fear. The ones who scale past $100K MRR understand something counterintuitive: low pricing creates the churn it’s trying to prevent.
What You Think Is Wrong vs What’s Actually Wrong
What you think: Low price helps compete. Need more users. A price increase will cause churn.
What’s actually wrong: Low price SIGNALS low value. It attracts price-sensitive users who churn more. You can’t afford to serve them well, which causes more churn.
Here’s what’s happening: Alaric runs a B2B SaaS product. $18K MRR at $29/month average.
His churn is 6% monthly. Not terrible, but constant. He’s replacing churned customers with new signups just to grow slowly.
He thinks: “If I raise prices to $79, churn will spike. I’ll lose half my users.”
What he can’t see: His low price is CAUSING the retention problem.
Low pricing attracts price-sensitive customers. They signed up because you were cheap, not because you solved their critical problem. When the budget tightens, or a competitor offers $19/month, they churn.
The retention paradox:
Customers at $29/month: 6% monthly churn, price-focused, high support burden
Customers at $99/month: 2-3% monthly churn, value-focused, lower support needs
Your retention is too HIGH—that’s how you know you’re underpriced. Price is a signal. Low price attracts low-value customers who churn anyway.
Alaric raised prices to $79 for new customers. Kept existing at $29 for 60 days, then moved them to $59 (grandfather rate).
What happened:
20% of existing customers churned
New customers signed up at $79 (slower but better fit)
Monthly churn dropped from 6% to 3%
MRR went from $18K to $28K despite losing customers
Revenue up 55%. Churn is cut in half. Support burden down 40%. Better business with fewer customers.
The Reframe That Changes Everything
“Your retention is too HIGH—that’s how you know you’re underpriced. Price is a signal. Low price attracts low-value customers.”
Stop protecting low prices. Start filtering for the right customers.
Do This Today (The Immediate Fix)
You don’t need to email all customers today. You need to see if your fear is justified.
Step 1: Calculate revenue if you doubled the price and lost 30% of customers
Current MRR: $18,000 Current price: $29/month
Estimated customers: ~620 customers
Scenario: Double price, lose 30%
Customers remaining: 434 (70% of 620)
New price: $58/month
New MRR: 434 × $58 = $25,172
Result: Lost 30% of customers, gained 40% revenue.
That’s worst-case. Typical case is 20-25% churn with better revenue and lower support costs.
Step 2: List complaints from churned users—are they price-sensitive?
Look at your last 20 cancellations. What reasons did they give?
Price-sensitive signals:
“Too expensive for what it does”
“Found cheaper alternative”
“Budget cuts”
“Not using it enough to justify cost”
Value signals:
“Migrated to enterprise solution” (you lost to upmarket, not price)
“Company shut down” (not your product issue)
“Missing feature X” (product gap, not price)
If 60%+ of churn is price-sensitive, your current pricing is attracting the wrong customers. Raising prices will reduce this churn, not increase it.
Step 3: Identify ONE segment that would pay 2-3x for the enhanced version
Look at your customer usage data. Which segment:
Uses product daily/heavily
Has larger teams
Gets measurable business value
Rarely complains about price
That’s your premium segment. They’d pay $79-$99 for an enhanced tier. Create it.
The 7-Day Protocol (Complete Solution)
Day 1: Analyze churn by price sensitivity
Pull the last 50 cancellations. Tag each by reason:
Price-sensitive (found cheaper, budget, “not worth it”)
Value gap (missing features, wrong fit)
External (company closed, migrated up-market)
If 50%+ are price-sensitive, your pricing is attracting the wrong customers. These will churn regardless—price increase just accelerates it.
Day 2: Segment customers by value received
Divide customers into three groups by usage/engagement:
High-value segment:
Daily active usage
Multiple team members
Using advanced features
Low support burden
Medium-value segment:
Weekly usage
Solo or small team
Basic feature usage
Occasional support
Low-value segment:
Rarely log in
Minimal usage
High support relative to value
Likely to churn anyway
Calculate: What % of MRR comes from each segment?
Typically: 60% of MRR from high-value (20% of customers), 30% from medium-value (50% of customers), 10% from low-value (30% of customers).
Day 3: Design a higher tier for the high-value segment
Your high-value users would pay more for the enhanced version. Create it:
Current plan: $29/month - Basic features
New Premium plan: $79/month - Everything + [advanced analytics, priority support, API access]
Don’t build new features first. Package existing capabilities differently. High-value users will pay for better access to what already exists.
Day 4: Grandfather existing users at old price (temporarily)
Announce: “Pricing is changing to $79/month for new customers. Existing customers stay at $29 for 90 days, then move to $59/month (existing customer rate).”
This gives them time to adjust and appreciate the value before price changes.
Day 5: Raise prices 50-100% for new users
Update pricing page:
Old: $29/month
New: $79/month (or introduce $59 Standard + $99 Premium)
New signups from today pay the new rate. Track conversion rate and customer quality.
Day 6: Track conversion rate change
Monitor for 14-30 days:
Signup rate before: _/week
Signup rate after: _/week
Drop: _%
Expected: 30-50% fewer signups. This is correct. You’re filtering for better fits.
Day 7: Evaluate revenue per customer, not just conversion
Old metrics: 100 signups/month × $29 = $2,900 MRR added
New metrics: 60 signups/month × $79 = $4,740 MRR added
Fewer customers, higher revenue, lower churn, better unit economics.
After 60-90 days, move existing customers to $59 (grandfather rate). 20-30% will churn—mostly the low-value segment you wanted to lose anyway.
Go Deeper: The Complete Framework
This solves the immediate problem—understanding that low SaaS pricing signals low value and how to raise prices to attract better customers.
But if you want the complete system for increasing revenue without increasing users, restructuring pricing to capture more value per customer, and building sustainable SaaS economics:
The Revenue Multiplier shows you how to double your earnings without working more. You’ll learn exactly how to increase revenue per customer through value-based pricing, why low pricing caps growth (not enables it), and how to structure offers that filter for best-fit customers who stay and pay more.
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