Price Increase (SaaS)

Definition

A price increase raises ARPA/MRR for an existing customer base. It is high leverage, but it can trigger churn or downgrades if customers perceive reduced value-for-money.

Formula

Break-even immediate churn (one-time) ~ 1 - 1/(1 + price increase)

How to use it

• Segment price changes by plan, usage, value delivered, and tenure.
• Watch revenue churn (downgrades + cancellations), not only logo churn.
• Use a rollout (grandfathering, phased increases) to reduce shock and learn safely.

Common mistakes

• Applying a blanket increase without segmentation.
• Over-focusing on short-term MRR while ignoring retention damage.
• Using platform-reported attribution to justify pricing changes (different problem).

Why this matters

This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.

Practical checklist

• Write a 1-line definition for "Price Increase (SaaS)" that your team will use consistently.
• Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
• Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
• Use a calculator that references this term (e.g., Price Increase Break-even Calculator) to sanity-check assumptions.
• Read the related guide (e.g., Price increases in SaaS: break-even churn, segmentation, and rollout) for context and common pitfalls.

Where to use this on MetricKit