What are “Sticky Prices” in the SaaS industry?

Sticky prices are software, SaaS subscription costs that remain unchanged regardless of the shifts that take place within the market or production expenses. 

In short, even if operational costs change or a competitor drops their prices, a SaaS provider keeps their rates the same, putting the customer first. 

Sticky prices represent a vital concept for businesses, especially in how they relate to customers and retention management. 

Menu costs and psychological stickiness are important concepts in the software subscription world. It is important to differentiate between the two:

SaaS companies put price stability first with the intention to protect brand equity and predictable revenue streams. 

Constantly changing prices can cause friction within the sales cycles, and ultimately, it can lead to subscription fatigue. This leads to churn.

Instead, keeping pricing stable allows the customer to plan their expenses and fosters a stronger relationship with the customer. This allows them to push prices up through feature updates, obtaining justification for the increase. 

Product integration plays a quintessential role in battling price sensitivity. 

If a customer takes the time to integrate a SaaS product within its organizational toolkit, it represents a strong commitment. 

Giving up on a product that has already been strongly integrated in a company’s workflow is unlikely, unless the revenue saved is impressively high. 

This allows SaaS providers to increase their costs in a controlled manner. 

During economic downturns, sticky prices can be a double-edged sword for Retención de ingresos netos (NRR). On the positive side, if prices are “sticky upward,” customers are less likely to see sudden spikes in their overhead, which helps maintain high retention rates and prevents “downselling.”

Pros and Cons for NRR:

• Ventajas: Maintains a stable revenue floor.
• Desventajas: Limits the ability to capture “ingresos de expansión” if price increases are frozen; margins may shrink if internal costs rise.