Pricing Change Simulator

How to use it

Model two futures side by side: one where you change nothing, and one where you change the price and pay for it in churn and lost sign-ups. The calculator runs both for twelve months and reports which is ahead.

Where the number comes from

• Both scenarios decay the existing base at their own monthly churn rate and add new customers each month.
• New arrivals in later months have themselves been churning since they joined, so the model tracks them separately rather than assuming they all survive.
• In the change scenario, existing customers move to the new price unless you grandfather them, and grandfathered customers keep both the old price and the old churn rate. Customers who sign up after the change pay the new price and churn at the normal rate — the extra churn is existing customers leaving because of the increase.
• Acquisition falls by the percentage you set, applied to every month after the change.
• The break-even figure is found by re-running the model at progressively higher churn until the change stops being worth making.

What goes wrong

The part most calculators leave out.

• The churn increase and the acquisition drop are the two inputs that decide the answer, and both are guesses until you have actually run the change. Everything else here is arithmetic; those two are forecasting.
• Churn from a price rise is not evenly spread over twelve months. It clusters immediately after the announcement and again at renewal, and the smooth monthly rate here understates the early shock.
• Annual contracts delay everything. If most customers are on annual terms, neither the revenue nor the churn arrives on this schedule.
• The model assumes new customers accept the new price without further resistance beyond the acquisition drop. In competitive markets a higher price also lengthens the sales cycle, which this does not capture.
• It says nothing about who leaves. Losing your smallest and least engaged customers is very different from losing your references, and both look identical here.
• Grandfathering is modelled as permanent. Most real grandfathering has an end date, which moves the churn rather than removing it.

Questions

How much churn should I expect from a price rise?

It depends entirely on how much value customers get and what switching costs them. The honest approach is to run this at several assumptions and see how bad it would have to be before you would not do it — usually the answer is much worse than you feared.

Should I grandfather existing customers?

It buys goodwill and reduces churn at the cost of leaving revenue on the table, sometimes for years. Set “Existing customers kept on the old price” to 50% or 100% and compare — the trade is usually smaller than it feels.

Why does the model separate new customers from existing ones?

Because someone who joined in month two has been churning for ten months by month twelve. Treating the whole base as one cohort overstates how many customers you still have.

Does anything I type get sent anywhere?

No. The whole calculation runs in your browser. Nothing is sent to us or logged, and there is no account to create. Your browser keeps the figures with this tab’s history so that Back and Reload bring them back, and Reset clears them.