Before deciding whether to raise prices, work out how many customers you could lose and still come out ahead. A 20% price rise pays for itself even if one customer in six leaves, and more than that once you count what each customer costs you to serve. If your honest worst case for cancellations sits below that line, the raise is worth doing, and the rest is execution.
The break-even line
Take a company with 180 customers on a €49 monthly plan, €8,820 of MRR. Each customer costs about €9 a month to serve: hosting, support time and payment fees. The plan is to move everyone to €59, a rise of 20.4%.
Two break-even points matter. The first is revenue: how many customers can leave before MRR falls below today's €8,820?
customers needed = 8,820 / 59 = 149.5 can lose = 180 - 150 = 30 customers (16.7%)
The second is contribution, meaning revenue minus the cost of serving each customer. Today each customer contributes €49 - €9 = €40, or €7,200 in total. At the new price each contributes €50.
customers needed = 7,200 / 50 = 144 can lose = 180 - 144 = 36 customers (20%)
The general version, for any price change:
share you can lose = 1 - (old price - cost to serve) / (new price - cost to serve)
= 1 - 40 / 50 = 20%
The higher your cost to serve, the more customers you can afford to lose, because each customer who leaves also takes their costs with them.
What the likely outcomes look like
| Customers who leave | MRR | Change in MRR | Monthly contribution | Change |
|---|---|---|---|---|
| 0 | €10,620 | +€1,800 | €9,000 | +€1,800 |
| 9 (5%) | €10,089 | +€1,269 | €8,550 | +€1,350 |
| 18 (10%) | €9,558 | +€738 | €8,100 | +€900 |
| 30 (16.7%) | €8,850 | +€30 | €7,500 | +€300 |
| 36 (20%) | €8,496 | -€324 | €7,200 | €0 |
Losing one customer in ten would feel like a disaster to most founders, and it still leaves this company €738 a month better off in revenue and €900 better off in contribution. The raise only loses money if one customer in five leaves because of it.
The reason is how the arithmetic works: every euro of a price rise on a customer who stays is pure margin, while a customer who leaves takes away their revenue and their costs. McKinsey made the same point about large companies in 2003: on the average S&P 1500 income statement, a 1% price rise with stable volumes lifted operating profit by 8% (The power of pricing). Your ratio depends on your own margins, which is why you run your own numbers rather than borrowing theirs.
Estimate your worst case before you decide
You cannot know how many will leave, but you can bound it. Go through your customer list and mark the accounts you think could leave over €10 a month: those who negotiated hard at signing, those who use the product lightly, those who have complained about price. If that list is 15 names, you are well inside the 30-customer line and the decision is easy. If it is 40, raise more gently, or raise the plan with a lighter tier for those customers to move to.
Check who is on the list, too. Price-sensitive customers who barely use the product can be the ones below your cost to serve once support time is counted. The break-even calculator helps if you are not sure where that line is.
The order to raise in
- New customers first. Change the list price for new sign-ups now. They have no old price to compare against, and within a few weeks you know whether the new price still converts. That evidence is useful when you write to existing customers.
- Existing customers at a natural moment. An upgrade, extra seats or an annual renewal is the easiest time to move someone to the new price.
- Everyone else, with notice. Check your terms of service and any contracts for a required notice period. Where they say nothing, give at least a full billing cycle; annual customers move at their renewal date.
One mechanical trap: raising the list price in your billing system usually changes nothing for existing customers. In Stripe, for example, archiving the old price stops it being used for new subscriptions, but existing subscriptions on it stay active until they are cancelled (Stripe docs). Moving current customers to €59 is a separate step: updating each subscription, in the dashboard or through the API. Founders who skip it end up with a new price on the website and the old one on every invoice.
The email
Keep it short and specific. Something like:
Subject: Your plan price from 1 November
Hi Sam, from 1 November the Team plan moves from €49 to €59 a month. Since you joined we have added shared calendars and the Slack integration your team uses every day. Nothing changes before then. If you would rather keep €49 for another year, switch to annual billing before 31 October. Any questions, reply here and it comes straight to me.
The date removes guesswork. Naming features they use answers "why" before they ask. The annual option gives the most price-sensitive customers something to say yes to, and it turns some of them into a year of cash upfront.
When someone pushes back
Have one fallback and offer it to everyone who asks: the annual lock, or a lighter plan if you have one. Avoid negotiating custom prices account by account. Every exception is something you have to remember at the next price change, and customers compare notes.
Model it before you send it
Before you send the email, put the change into your model so you can see what it does to runway. In Plainhub, add it as a draft plan with a negative monthly impact (a plan that brings money in is entered with a minus sign): -€1,269 for the 5% case, or -€30 for the break-even case. A draft changes nothing in your numbers. It shows the runway you would have if it went ahead. Once the new prices are billing, update the revenue you record and delete the draft.
Then watch cancellations for two billing cycles and compare them with the line you calculated. If you stay well under it, you have your answer for the next price review. If you get close, you have learned something about how much the product is worth to those customers before the next change.