# Raising prices without losing customers

> When the evidence says the price is too low: a new price for new customers, a fair, time-limited path for existing ones with a sample price increase notification, and two tempting offers that quietly cost money: a lifetime deal and a free plan.

- Course: [From Idea to Profitable Product: Building Without Investors](https://productovi.com/courses/bootstrapped-product.md)
- Module: Numbers every month
- Lesson 22/30, ~27 min
- Source: https://productovi.com/courses/bootstrapped-product/raising-the-price

## When to raise prices: five cars for 600

**Alex Tutor:** A quieter day at GarageDesk. Oscar has been out visiting shops, and he wants your take as an advisor.

**Oscar:** I visited Dennis yesterday. He says the reminders bring back about five regulars a month. He called GarageDesk “the cheapest employee I've ever had”.

**Alex Tutor:** Remember his numbers from January: one returned oil change leaves about 700 UAH of margin. Five cars is 3,500 a month, for a 600 subscription.

**Nina:** And our costs grew. The more reminders shops send, the bigger the SMS bill.

**Sofia:** Isn't “he'd pay more” just a feeling, though?

**Alex Tutor:** One owner is a feeling. Here there are three signals together: value several times the price, almost no one objecting to the price when Oscar sells, and none of the eleven shops that left named the price as the reason.

![A balance scale tips heavily toward a little line of cars returning to a garage; a single small price tag sits on the raised side.](https://productovi.com/courses/bootstrapped-product/inline/raising-the-price-illustration-2.webp)

> **Exercise:** Which evidence best supports raising GarageDesk's price?

## A new price for new customers first

**Nina:** Proposal: from 1 January new shops pay 750 a month, or 7,500 a year.

**Alex Tutor:** The yearly plan keeps the same logic as before: ten months' price for twelve months. New shops see only the new price, so nobody feels anything was taken from them.

**Oscar:** And in Khmelnytskyi they've never heard of 600 anyway.

**Alex Tutor:** Then watch one number for the first months: how many shops Oscar talks to end up paying. If it barely moves at 750, the price was too low. If it drops sharply, you learned something cheaply.

**Alex Tutor:** Make sure you read that number the right way round.

> **Exercise:** **True or false:** GarageDesk raises its price for new shops from 600 to 750 UAH a month. If, at 750 UAH, the share of shops Oscar talks to that end up paying barely changes, the new price is probably too high.

> **Exercise:** From 1 January a new shop can pay 750 UAH a month or 7,500 UAH a year. How much does one new yearly shop add to MRR, in UAH?

## Existing customers: a fair, time-limited path

**Sofia:** And the 64 shops already on the old price?

**Alex Tutor:** They took a risk on you early. Five of them prepaid before a line of code existed. Raise their price overnight and you spend that trust.

**Alex Tutor:** But keeping 600 forever is a trap too. The old price becomes a **legacy plan** that never ends: part of the base underpriced for years while the product keeps improving for them.

![Long-time customers walk up a gentle, long ramp toward a higher platform while new customers step straight onto it from the side.](https://productovi.com/courses/bootstrapped-product/inline/raising-the-price-illustration-3.webp)

*Early shops get a year's notice; new shops see only the new price.*

**Nina:** So a fixed period. Existing shops keep 600 through all of next year and move to 750 the year after. Yearly shops renew at 6,000 next year too.

**Oscar:** A whole year of notice. Nobody can say we ambushed them.

![New shops pay 750 UAH from 1 January; existing shops get notice in November, keep 600 through next year and move to 750 the year after.](https://productovi.com/courses/bootstrapped-product/diagrams/m6-l3-price-path.png)

*A fair, time-limited path for early customers.*

**Alex Tutor:** Put a number on what that path costs an existing shop once it ends.

> **Exercise:** After the switch, an existing monthly shop pays 750 UAH a month instead of 600. How much more does it pay per year, in UAH?

> **Exercise:** Match each way of handling GarageDesk's price with its main consequence.

## A lifetime deal: an offer that sounds like money

**Oscar:** Different topic. A deals website wants to sell GarageDesk as a lifetime deal: a shop pays 9,000 once and uses it forever. They promise a hundred shops.

**Sofia:** Nine hundred thousand at once. That's tempting.

**Alex Tutor:** Count it per shop. 9,000 is twelve months at 750. With churn around 5%, an average shop stays about 20 months, so it would bring roughly 750 / 0.05 = 15,000. And every reminder a lifetime shop sends is SMS you pay for, forever.

**Alex Tutor:** And who buys on a deals website? Bargain hunters, mostly not your niche. A **lifetime deal** makes sense only as emergency cash with clear terms. You aren't in an emergency.

![A customer hands over one big coin at a garage door while behind him a long line of smaller coins fades into mist.](https://productovi.com/courses/bootstrapped-product/inline/raising-the-price-illustration-4.webp)

> **Exercise:** An average GarageDesk shop pays 750 UAH a month and monthly churn is about 5%. Estimate the revenue from one average shop over its lifetime, then subtract the 9,000 UAH one-off lifetime-deal price. How much revenue does GarageDesk give up per lifetime-deal shop, in UAH?

## Freemium: is a free plan free for you?

**Oscar:** Then a free plan for Khmelnytskyi? Shops try it, love it, pay later.

**Nina:** A free shop still sends reminders. Every SMS costs us money. A free plan here isn't free for us.

**Alex Tutor:** That's the test for **freemium**: does a free user cost almost nothing, and do the limits bite exactly when a shop starts getting value? Neither holds for GarageDesk.

**Alex Tutor:** If the worry is risk for a new shop, lower the risk instead: money back in the first month if no regular comes back.

**Alex Tutor:** Oscar wants something for hesitant shops in Khmelnytskyi. Two offers; pick one.

> **Exercise:** Which offer lowers a new shop's risk without costing GarageDesk money on every shop?

> **Exercise:** **True or false:** a free plan would cost GarageDesk almost nothing, because software costs nothing to copy.

## Notice of a price increase: what goes in it

**Alex Tutor:** Last step: tell existing shops now, in November, before anyone sees 750 on the website.

**Oscar:** What goes in it?

**Alex Tutor:** What changes and from when, what stays the same for them and until when, why, and who to call with questions. No apologies, no fine print.

> **Exercise:** From 1 January new GarageDesk shops pay 750 UAH a month or 7,500 a year. Existing shops keep 600 a month (yearly plans renew at 6,000) through all of next year and move to 750 from 1 January the year after. The reason: shops send more reminders, each SMS costs money, and the team keeps building what shops ask for. Oscar answers questions. Write GarageDesk's price notice to existing shops (4–6 sentences). It goes out by Viber and email in November.

## A sample price increase notification

**Alex Tutor:** Compare yours with this one. A good **price increase notification** fits on one phone screen: a subject that says what changes, the new price and date, what stays the same for this customer and until when, an honest reason, and a person to contact.

> **GarageDesk prices from 1 January: what changes for you**
>
> Hello! From 1 January GarageDesk costs new shops **750 UAH a month or 7,500 UAH a year**, 150 UAH (25%) more than today.
>
> For you, nothing changes next year: you pay **600 UAH a month**, and a yearly plan renews at **6,000 UAH**. Your price moves to 750 a month (7,500 a year) only from 1 January the year after, and we'll remind you a month before.
>
> Why: you send more reminders every month, each SMS costs us money, and we keep building the features you ask for.
>
> Questions? Call or message Oscar on Viber: he'll go through your numbers with you.

**Alex Tutor:** Notice the numbers it doesn't hide: plus 150 a month, 25%. After the switch a monthly shop pays 1,800 more a year, about half of what Dennis's five returning cars bring him in a single month. And the notice comes more than a year before their price moves.

**Oscar:** No surprises and a date in writing. I'll send it to all 64 shops on Monday, Viber first.

> **Key ideas**
>
> - Raise the price on evidence: value several times the price, few price objections, nobody leaving over price.
> - New customers see only the new price: **750 UAH a month / 7,500 a year** from 1 January; a yearly shop adds 7,500 / 12 = 625 to MRR.
> - Existing customers get a fair, **time-limited** path: 600 for all of next year, then 750, with notice now. A **legacy plan** with no end date keeps part of the base underpriced for years.
> - A **lifetime deal** trades about 15,000 of future revenue for 9,000 now, plus costs that never stop.
> - **Freemium** fails when every free user costs real money, as with SMS reminders.

**Alex Tutor:** Next time: a franchise with 40 shops wants GarageDesk, on its own terms. What happens when one customer gets too big?

- Previous lesson: [Why customers churn and how to reduce it](https://productovi.com/courses/bootstrapped-product/why-shops-leave.md)
- Next lesson: [Revenue concentration: one customer too big](https://productovi.com/courses/bootstrapped-product/one-customer-too-big.md)

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