“But will people still buy it?”

If you’ve ever felt nervous about raising your SaaS prices, you’re not alone. Founders often worry it’ll scare customers away, slow growth, or worse – fuel churn.

But here’s the hard truth: underpricing is one of the most common (and expensive) mistakes scaling SaaS startups make. And it’s not just a revenue issue. It’s a margin, runway, and valuation issue too.

So, let’s talk about the real financial impact of pricing too low — and how to know when it’s time to step things up with your SaaS pricing strategy.

Cheap pricing might be hurting your growth

It sounds counterintuitive. Surely low prices = more conversions, more customers, faster growth?

Sometimes, yes — but not always. Especially as you scale.

Here’s what underpricing often leads to:

• Lower margins, meaning you need more capital or time to reach profitability
• Poor CAC recovery — it takes longer to earn back what you spent on acquisition
• Higher churn, because lower price customers often have lower commitment
• Support strain, as you stretch to serve too many customers for too little return

And perhaps most importantly — you limit your ability to invest in the product, the team, and customer success, which eventually catches up with you.

What the numbers say: LTV, CAC and price sensitivity

From a finance lens, here’s why pricing matters so much.

Let’s say:

• You spend £500 to acquire a customer (your CAC)
• You charge £30/month
• That customer sticks around for 12 months

At an 80% gross margin, your gross profit is £288 over the year — so your LTV is £288.

That’s an LTV:CAC ratio of 0.58 — which is very unhealthy. Investors usually want to see at least 3:1.

Now imagine you raise prices to £50/month with the same retention. Suddenly your LTV is £480. That’s a 0.96x jump in margin, without adding any new features, doing extra marketing, or hiring more people.

It’s one of the few growth levers that’s 100% within your control.

Pricing sends a message — and yours might be too humble

Pricing doesn’t just reflect cost. It communicates value.

When your product is underpriced:

• Enterprise clients might not take it seriously
• You attract smaller customers who churn faster
• You invite over-servicing because the expectations aren’t aligned with the price

At scale, these things start to erode not just your margin — but your brand position too.

You want your pricing to be:

• Sustainable — it funds growth and stability
• Confident — it reflects the value you’re delivering
• A filter — it helps you attract customers who are a good fit, not just bargain hunters

Signs it might be time to raise your prices

If you’re wondering whether your SaaS is too cheap, here are some strong signals:

• Customers aren’t pushing back on price at all
• You’ve added features or expanded support but haven’t changed pricing
• Your best customers say they’d pay more (or are surprised it’s so low)
• Your CAC payback period is stretching beyond 9–12 months
• Your margins are shrinking despite growing revenue

You don’t need to overhaul your whole model overnight — but even a 10–20% increase across your plans can have a significant impact on your bottom line.

How to raise prices without freaking everyone out

Worried about churn or backlash? That’s fair — but the key is clarity and timing.

Here’s a framework that works:

• Communicate early: Give customers notice, especially annual contract holders
• Explain the “why”: Position it around continued investment in product, support and experience
• Reward loyalty: Offer existing customers the option to lock in current pricing for 6–12 months
• Segment smartly: Consider raising prices for new customers first while keeping existing plans stable
• Test: If you’re unsure, test different pricing in new markets, customer types or onboarding flows

This isn’t about being greedy — it’s about charging enough to deliver properly and grow sustainably.

What founders get wrong about pricing

Many early SaaS founders price emotionally:

• “We’re not big enough yet.”
• “I wouldn’t pay more if I were the customer.”
• “It’s better to get them in cheap and upsell later.”

But as you scale, your pricing needs to reflect your true value, your costs, and your growth ambitions — not your own money fears.

If your product delivers results, your pricing should match that confidence. Otherwise, you end up scaling a business that doesn’t actually work on paper — and investors will notice.