When it comes to SaaS pricing, the Grandfather Clause allows your existing customers to maintain the same prices and services they subscribed to while you change your pricing for new customers.
The Grandfather Clause, also known as the “Clause d’antériorité” in French, “Legacy clause,” and in English, “Grandfather clause,” “Grandfathering,” or “Grandfather policy,” preserves acquired rights.
Example: At ProAbono, our first customers were able to subscribe to a plan at €127 excl. VAT per month. Later, it increased to €149 excl. VAT per month. Finally, we introduced two plans at €79 excl. VAT per month and €179 excl. VAT per month. With each pricing change, the new plans included different service levels and/or new features (data export, dashboard, number of collaborators, languages, currencies, usable payment gateways, etc.).
Customers who were satisfied with the pricing and associated services of their subscription could stay on their current plan, while others could choose to switch to a different plan.
Systematically, all new customers could only subscribe to the latest published plans.
Advantages of the Grandfather Clause
Often, when a company starts offering a product/service/website/application through subscription, it initially offers very advantageous pricing. As the service/product evolves with added benefits and features, the company wants to modify its pricing or introduce new plans to drive revenue growth. These changes, if poorly managed, can be poorly received by existing customers. What are the advantages of managing your pricing/plans with a grandfather clause or legacy clause? At first glance, it may seem like you’re foregoing revenue. But upon closer inspection, you’ll see that the grandfather clause allows you to:
Conduct pricing experiments to improve your retention rate
Customer acquisition costs (CAC) represent a significant portion of any company’s expenses. Testing new prices, repackaging your services differently without modifying the pricing and service conditions for your existing customers, gives you tremendous agility and freedom to act.
Maintain long-term customer satisfaction
The relationships you establish with your early customers are often more personal than those you establish as you grow. And your early customers are likely to be your most loyal supporters in the long run. The grandfather clause respects your initial relationships.
Retention costs less than acquiring new customers.
ProAbono and the Grandfather Clause
In ProAbono, when a customer subscribes to a plan, it creates a subscription.
This subscription is a copy of the plan at the time of subscription.
From the ProAbono back office, you can modify the prices and features of the plans without affecting the subscriptions of current customers. This gives you the freedom to test new pricing while maintaining the current pricing for your existing customers’ subscriptions.