Grandfathering

When I joined Aftershoot, we had a never-change-the-price policy for early subscribers. At first, I thought—this is a future revenue leak waiting to happen. But then, I saw the magic: customers stuck around forever. The retention was insane.

This is called grandfathering, and it’s both a blessing and a curse. Let’s break it down.

What is Grandfathering in SaaS Pricing?

Ever heard the term grandfathering? No, it’s not about your actual grandpa.

In SaaS, grandfathering means keeping your existing customers on their original pricing plans, even after you update your product and hike prices for new users. They get all the new features, all the updates—but keep paying the old rates.

Sounds like a loyalty reward, right? But it’s more than that—it’s a strategic choice.

Some companies swear by it. Others avoid it like the plague. Let’s see why.

The Good: Why Grandfathering Can Be a Game-Changer

1. Retention Rates Skyrocket

Customer acquisition is expensive. Grandfathering locks in early users at a low cost, keeping them happy and minimizing churn. You can tweak pricing for new users without disrupting your core base.

2. Early Users = Superfans

Your first customers are your biggest advocates. Keeping them on legacy pricing makes them feel valued. And guess what? They’ll tell everyone about your product. That kind of word-of-mouth marketing is priceless.

3. Pricing Experimentation Without Mass Exodus

Want to test a price increase? Try it only on new customers first. If it backfires, you don’t lose your entire revenue stream. Grandfathering lets you iterate without scaring off your most loyal users.

The Bad: When Grandfathering Becomes a Revenue Trap

1. You're Leaving Money on the Table

Every time you improve your product but don’t charge more, that’s potential revenue lost. If too many customers are locked into old pricing, your growth stalls.

2. Perceived Value Drops

Customers might think, If they’re giving me so much more without charging extra, was the product overpriced to begin with? That’s a dangerous perception shift.

3. Cash Flow Takes a Hit

If too many users are on low grandfathered pricing, you’ll need a ton of new customers at higher rates to make up for it. That’s not always sustainable.

4. Operational Nightmares

Managing multiple pricing tiers over time can be a logistical mess. If you’re not careful, billing and support become a headache.

So, Should You Grandfather?

Short answer: Maybe. But do it strategically.

Here’s how to avoid the grandfathering trap while keeping customers happy:

1. Time-Limited Grandfathering – Let early users stay on old pricing for a set period (e.g., 12-18 months), then gradually migrate them.

2. Offer Upgrades, Not Just Price Hikes – Sweeten the deal with exclusive perks for those who move to the new plans. Make it a win for them.

3. Transparent Communication – If you’re raising prices, don’t shock your users. Give them a heads-up and explain why.

4. Tier-Based Approach – Keep your most basic grandfathered plan but charge extra for new premium features. That way, legacy users aren’t freeloading on high-cost features.

Final Take

Grandfathering is a tool, not a rule. Use it wisely.

If done right, it boosts retention and customer loyalty. If done wrong, it kills revenue. The key? Find the balance. Keep your users happy and make sure your business scales sustainably.

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