Why Pricing Revolutions Fail (And What Actually Works)

You bring in the expensive pricing consultants.

The analysis looks bulletproof. Market data. Competitive benchmarking. Willingness-to-pay studies. The PowerPoint deck gets board approval.

Six months later? Your renewal rates are soft. Sales are negotiating around the new pricing. And your best customers are asking uncomfortable questions.

Here’s what happened.

The pricing revolution was done to your teams, not with them.

And your customers weren’t even in the picture.

What The Four Year Erosion Looks Like

I worked with a B2B information business. £25M ARR. PE-backed. Excellent product in a maturing market.

The pricing consultants came in. Delivered a comprehensive value-based pricing model. Identified 30% pricing opportunity. Board approved the rollout.

Year 1: 25% price increase implemented. Revenue jumped. NRR hit 115%. The CFO presented the results to the fund. Success.

Year 2: Another 15% increase. Best in class NRR (130%!) A few customers grumbled. But renewals held at 94% GRR. Another win.

Year 3: More NRR planned (NRR = Multiples). Strategic stakeholders are quiet. Sales start offering “transition pricing” to close deals. GRR drops to 89%. There are 2 sides of the story – 1 team is “smashing” the NRR. The other team has declining NRR.

Y4 Intervention: The pricing lever was not used effectively in the past, and so the steer from the pricing consultants helped – at first. But product and customer experience was not part of the strategy. In annual subscriptions you have some time to pull this together after an initial pricing revolution (1-2 years if you like living on the edge).

The high Net Revenue Retention NRR reported for one team, masked declining and then decaying Gross Revenue Retention GRR. Aggressive pricing drove underlying churn to 4% in addition to the headline churn rate. Increased pricing requires customer success and better product.

The pattern is predictable. The causes are preventable.

The Due Diligence Trap

Most companies mistake due diligence for market understanding.

You’ve got TAM, SAM, SOM analysis. Competitor insights. Usage data. Customer segmentation models.

But you don’t know what makes your product must-have for different customer types across market segments and within the companies.

Due diligence tells you what the market could pay. It doesn’t tell you what specific customers will pay based on the value they experience – or might be willing to pay if you improve your solution.

That requires talking to customers about their jobs, their constraints, and what they’d do without you. Not running regression analysis on pricing elasticity.

The Erosion Pattern

Here’s what we see in subscription businesses:

The installed base erodes slowly, then suddenly.

Why?

Because aggressive pricing without product evolution or customer value expansion destroys the value perception you spent years building.

The Silo Problem

Your pricing consultant delivered a beautiful new pricing model.

But your product team wasn’t in the room when it was designed. So they don’t know which features justify premium tiers.

Your sales team got a mandate and a new price list. But they don’t believe the story. So they’re still negotiating like they did before.

Your customer success team is chasing renewals. But they’re measuring “time to value” based on what you think matters, not what customers actually hired the product to do.

Targeted, Contextual Pricing Works

Pricing isn’t a lever you pull once.

It’s part of your operating system for capturing value.

That means:

Your product roadmap connects to customer results to inform pricing evolution. When you add capabilities to solve bigger problems, pricing adjusts to capture expanded value.

Your sales compensation aligns with your Annual Recurring Revenue and the pricing model. If you’re selling value-based tiers, comp structure rewards selling the right tier to the right customer, not just closing deals. Compensate for GRR not just NRR.

Your customer success metrics track value realisation that customers care about. Not your internal proxy metrics. How do your customers define results?

The Pattern We See

Companies that get pricing right treat it as strategic capability, not tactical adjustment.

They involve teams in designing the approach, not just implementing the mandate.

They test pricing changes with real customers before rolling out broadly.

They build pricing evolution into product strategy, not as an afterthought when growth slows.

And they measure pricing success by revenue quality (retention, expansion, customer health), not just revenue quantity (deal size, volume).

Five Questions To Assess If Your Pricing Strategy Is Sustainable

1. Can your frontline teams explain why customers should pay your price?

Not the pricing model or features. The customer results to warrant the investment.

2. When did you last ask customers what makes you must-have vs. nice-to-have?

Due diligence surveys don’t count. I mean actual conversations where customers explain their jobs, their alternatives, and what they’d do without you.

3. Is your product roadmap and pricing evolution connected?

When you add capabilities that solve bigger problems, does pricing adjust to reflect expanded value – or do you build features hoping they’ll “improve retention” without clear value connection?

4. Is your first year churn materially worse than your mature accounts?

What wonders are your sales teams promising new customers? What special offers are lurking in special terms and discounts? Who is building the pursuit list and what are they using to improve the % of ICP in pipelines?

5. Can you explain your GRR and NRR by customer segment, not just overall?

130% NRR might hide 70% GRR in your largest segment. Which means your growth is putting your installed base into a slow cooker to eat later.

How Substribe Helps

We inject customer value into your way of working, to give you cut through on building effective products, without feature bloat, connecting to meaningful customer results so that you capture revenue and sustain growth.

Market Testing

Sprints to understand what makes you must-have for different customer segments.

We interview customers and prospects across your base. Deep jobs-to-be-done conversations about their world, their alternatives, and where you fit.

The outcome isn’t just pricing recommendations. It’s clarity about your market positioning, what different segments value, and how pricing should evolve with product development. To drive customer results.

This works when: You’re considering significant pricing changes, entering new markets, or seeing unexplained churn in specific segments. Or feeling like growth is slowing.

Revenue Performance Transformation

Comprehensive analysis transforming your recurring revenue data into actionable management insights.

We look at GRR and NRR by segment, cohort, and customer type. We identify where pricing power exists and where it’s eroding. We connect retention patterns to product usage, pricing changes, and customer characteristics.

Then we help you build awareness and acumen for pricing strategy connected to reality.

This works when: You have several years of revenue data but struggle to understand what’s driving retention, expansion, and churn patterns.

Quarterly Intelligent Interventions

Strategic partnership for ongoing pricing and value capture evolution.

Monthly CEO check-ins. Quarterly senior leadership sessions. Continuous support as you implement changes and adapt to market feedback.

Systematic intelligence about customer value to inform every strategic decision.

This works when: You want external perspective and subscription expertise integrated into your leadership rhythm.

Get help

If you’re wondering whether your pricing strategy is sustainable, let’s talk.

Book a 30-minute conversation: andy@substribe.co

Or if you want to understand what customers actually value before making pricing changes, let’s talk about testing ideas with your customers to energise them and your teams.

Don’t wait until your renewal rates tell you the pricing revolution failed.

Andy Burden has worked in and with B2B subscription businesses since 2001, helping leaders build systematic approaches to capture value. Substribe provides strategic frameworks, customer intelligence, and ongoing support for subscription businesses looking to improve revenue quality and customer value. Andy combines his insights, research conversations and the Substribe “SubsBrain” to generate articles like this.