Our portfolio companies have had the following experiences with price escalators:
“We started including auto-price increases in our renewals at the start of this year and it’s been surprisingly effective. Our starting point is 10% and we get it more often than not; some customers negotiate us down to the 3–5% range.”
So, if your SaaS contracts don’t have automatic price increases by 5% to 10% upon annual renewal, you’re missing out on free money, negotiating leverage with customers, and improved retention metrics.
Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com
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