How to Use Grandfathering (Legacy Pricing) the Right Way

FAQ

• Is grandfathering for scaling SaaS a good long-term pricing strategy?

  Although it works well for early retention, permanent grandfathering can create a large gap in revenue once your product and operational costs start to go up. Most scaling companies end up switching to a hybrid model, giving their loyal customers a long-term discount, but still have to face some occasional adjustments to justify current value.

• What should I take into consideration when keeping or moving my users to legacy rates?

  Look at your early beta testers because It is common to maintain original pricing for them while moving users who signed up during later growth stages to new tiered pricing plans.

• How should I let my customers know when I am planning to increase my prices?

  Send a friendly email that is open and honest at least 30 to 60 days in advance, that clearly communicates any new features and infrastructure improvements since they first purchased your SaaS. Focus on the increased value of the software rather than any financial needs of the company.

• Should I remove features from legacy plans to encourage users to upgrade to the new plan?

  It is usually best to add new features rather than take anything away from loyal customers that they already rely on. Removing existing functionality often leads to high churn rates and loss of trust, while adding new tools is a natural incentive for users to move to a higher tier.

• Will using the grandfathering approach affect the valuation of my SaaS?

  Investors often view a large base of legacy users that are on very low rates as undermonetized, which unfortunately can lower your SaaS valuation. But offering a clear path to transition these users to the right market rates shows that you have a data-driven growth strategy in mind.

• What should I do if a legacy customer threatens to cancel over a price increase or change?

  You can try offering the basic version of your modern plan or even give them a temporary extension with their old rate for an additional six months to subdue them. This will help to protect your customer retention rate while hopefully still moving the user into your updated billing system eventually.

• Does grandfathered pricing help lower the chance that my users will churn?

  Actually, studies show that users paying significantly below market value are sometimes more likely to churn because they don’t really perceive the product as high-value. It seems that charging a fair, modern price (even if it’s increased) can keep customers more engaged with the product and your support team.

• Should I just avoid using the grandfathering strategy?

  It’s true that avoiding grandfathering is a choice often made by more mature companies with high market share so that revenue scales directly with product value. But, for early-stage startups, choosing not to use it at all can increase customer churn and also create negative feelings among the loyal users who first helped build your SaaS business to begin with.

• Is there any right time to use grandfathering?

  Grandfathering is found to be the most useful during major product pivots, rebranding, or when moving from a 프리미엄 모델 to paid tiers. This is because it acts as a loyalty reward that secures your core user base during periods of instability, helping your MRR remain stable while you experiment with new acquisition strategies.

• What risks related to grandfathering should I be concerned about when planning for a long-term business?

  The primary risk is ‘operational fragmentation’, where your team must manage multiple billing logic sets and support legacy features for a shrinking, low-paying cohort. Over time, this can lead to revenue churn as the resources spent maintaining legacy accounts could be better spent on development updates, new features, and better support for high-value 엔터프라이즈 SaaS clients.