Ken Babcock, CEO of Tango.ai, raised prices by $4 and saw churn spike initially, but net and gross retention improved afterward. The price increase forced customers to reassess their commitment, leaving a healthier paid-user base. Unlike Uber's demand flywheel, SaaS pricing works differently.
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I think the fascinating thing about raising prices has been that our overall health metrics have gotten a lot better. And so when you think about net retention, gross retention, you know, the difference of $4 may not seem like a lot, but when we said to a user, hey, your plans are going up by $4, that forces them to kind of have a conversation with themselves of like, All right, is this it? Am I like, am I committed here? And so you see some initial churn, but then, you know, after that initial churn, you've got a healthier paid user base. And so, you know, those metrics for us have improved too, which I think countered a lot of what I learned at Uber because at Uber it was always like lower prices, increased demand. Demand is better for drivers because they're more utilized. They earn more even though we drop prices. That was always kind of like the overall flywheel. So, you know, for us, like raising prices, obviously in a SaaS model, very different, has had some unexpected benefits too.