Thinking of cutting prices to stop churn? Hold up—that’s a big no-no! 🚫 Here’s the truth: if customers aren’t getting value or enjoying your product, lower prices won’t keep them around. They’ll leave, even if it’s practically free.
Take Slidebean, for example. Instead of slashing prices to fight churn, they did the exact opposite: they raised their prices by 4x—and the results were nothing short of mind-blowing.
The Results of Raising Prices:
- Churn Rate Plummeted:
- Before the price hike, their churn rate was a steep 25%.
- After the change, churn dropped to an impressive 6.53%—that’s almost 4x better! 😱
- Lifetime Value (LTV) Skyrocketed:
- Their LTV jumped from a modest $22 to a whopping $444.
- That’s a 20x boost in customer value. 🚀
Why Raising Prices Worked:
- Perceived Value Increased:
Higher prices signal a higher-quality product. Customers were more willing to engage deeply and stick around because they now viewed Slidebean as a premium offering. - Attracting the Right Customers:
The price hike filtered out low-commitment users who weren’t serious about using the product. Instead, they attracted dedicated customers who were ready to invest time and money. - Customer Engagement:
When people pay more, they’re more likely to actively use the product. This increased engagement naturally led to lower churn and higher satisfaction. - Resources to Improve:
Higher revenue per user gave Slidebean the means to invest in better features, support, and user experience, creating a positive cycle of value and loyalty.
Key Takeaway:
Lowering prices isn’t the magic bullet to stop churn—it’s a band-aid that might hurt more than help. Instead, focus on delivering massive value, improving your product, and pricing it to reflect that value.
As Slidebean showed, sometimes charging more doesn’t just increase revenue—it actually increases loyalty and transforms your business. 💸
So, next time you’re tempted to cut prices, ask yourself: What if the real answer is raising them instead? 🤔🚀
Source: blog.slidebean.com