The $6M Pricing Strategy Mistake

B2B SaaS company, $5M ARR, 200 customers, strong product-market fit. Hired pricing consultant from top tier firm to "optimize pricing strategy."

Consultant ran analysis showing we were "leaving money on the table"—customers would pay 3x current prices. Recommended aggressive price increase: $299/month → $999/month for core tier. Data showed customers had high willingness-to-pay. We'd be "more premium." Board loved it—higher prices = higher valuation. We grandfather existing customers for 12 months, new customers pay new prices. Implementation date: January 2023.

New customer acquisition dropped 80% overnight. Sales team couldn't close deals—price was too high for decision-maker budgets, required VP approval instead of manager-level purchases. Competitors who were previously inferior became "good enough and 1/3 the price." After 6 months, only 12 new customers at new pricing. When grandfathering ended, 45% of existing customers churned rather than accept 3x increase. We panicked, dropped prices back, but damage was done—market now saw us as "expensive" even at old pricing. Lost 18 months of growth momentum. Missed revenue targets forced down-round.

• Test pricing changes with 10% of new customer leads before full rollout
• Weight sales team input 2x consultant recommendations—they talk to customers daily
• Never increase prices >50% in single move—do 25% increments with validation
• Measure willingness-to-pay by actual purchases, not surveys
• Keep pricing within buyer authority limits—crossing approval thresholds kills conversion
• Build pricing experiments into product from day one for continuous testing