SaaS Pricing

Should Companies Increase Pricing During Inflation?

Apr 23, 2025

SaaS pricing strategy during inflation - should companies increase prices or focus on efficiency?

Inflation is up, and costs are rising everywhere, so conventional wisdom says you should hike your software prices too, right? Not so fast. For SaaS businesses, inflation doesn’t impact them the same way it does for manufacturers or retailers. In industries like manufacturing, rising input costs like materials, energy, and labor create immediate pressure to raise prices. SaaS is different.

SaaS companies have high gross margins, and many of their core costs (e.g., R&D, cloud hosting, support) are semi-fixed, meaning inflation doesn’t automatically push them to raise prices. Treating inflation as an automatic trigger for price hikes can actually hurt SaaS companies in the long run, especially when they don’t link price increases to value or growth.

However, inflation alone isn’t the full story. The deeper structural force behind recent SaaS pricing moves is something economists refer to as "regime change," primarily driven by shifts in interest rates and the cost of capital. These economic shifts are reshaping how SaaS companies approach growth and pricing strategies.

When interest rates rise, the investment community prioritizes profitability and cash-flow efficiency over growth-at-all-costs, fundamentally changing valuation dynamics and pressuring SaaS companies to prove efficient growth.

In this post, we’ll explore what’s happened with SaaS pricing over the last few years and why enterprise B2B software leaders should think twice before reflexively raising prices due to inflation. Let’s first take a look at the current SaaS pricing landscape and understand how inflation hits retailers and SaaS businesses differently.

The SaaS Pricing Landscape

While inflation is often the first factor considered when adjusting pricing, it is not the only force at play in the SaaS industry. The SaaS industry has seen rapid growth in the late 2010s, but that momentum has slowed. By mid-2022 into 2023, customer demand softened considerably. Growth became harder to achieve, as companies were no longer seeing the same level of demand they had in 2021.

Alongside this decline in demand, the era of easy capital came to an end. Rising interest rates and growing economic uncertainty forced investors to reconsider their priorities. Growth-at-all-costs was no longer the focus. Instead, efficient growth and sustainable profitability became important. Investors began demanding improved margins, putting increased pressure on SaaS companies to prove they could scale efficiently, even in a tough economic climate.

With these pressures mounting, many SaaS companies initially turned to price hikes as a potential solution. At first glance, raising prices was like an obvious fix, especially as a way to boost revenue. But, practically it was not always the most effective or sustainable solution in the face of these challenges.

Despite price increase, many SaaS companies were able to see better margins in 2022-2023. Reason being that instead of simply raising prices, these companies focused on:

Cost management
Improving operational efficiencies
Optimizing customer acquisition costs

Focusing on these internal factors, many SaaS companies were able to increase margins without the risk of alienating customers or creating churn. These companies were able to navigate economic pressures more effectively than those who simply raised prices.

Now that we’ve seen how efficiency-focused strategies can work, let’s examine why inflation’s impact on SaaS is different from other sectors.

Inflation’s Impact on SaaS: Not the Same as for Physical Goods

Inflation in traditional sectors like manufacturing or retail triggers price hikes because input costs (materials, energy, shipping, labor) increase, which squeezes margins. However, SaaS is different:

Cost structure

Once the software is built, serving additional customers is relatively cheap.
Major cost components like R&D, cloud hosting, and support are semi-fixed.
SaaS companies often have high gross margins (typically 70-80%), which means inflation in raw materials and labor doesn’t directly impact subscription pricing the way it does for physical goods industries.

Labor costs

Wage inflation in the tech industry was felt in 2021-2022, especially for software engineers.
By 2023, the tech sector faced belt-tightening, layoffs, and lower salary pressures, reducing the impact of labor inflation.
Many companies found they could improve free cash flow margins by cutting discretionary spending and emphasizing productivity.

Cloud hosting costs

Major cloud providers have not imposed inflation surcharges.
SaaS businesses can optimize cloud hosting costs through techniques like reserved instances, which help manage costs more effectively.

Price hikes rationale

The main reason for price increases is not rising costs but rather the opportunity to capture more revenue per customer.
As growth slowed, raising prices became an easier way for companies to boost revenue.

Bottom line: In a typical software organization with 80% gross margins, inflation doesn’t force a subscription price jump the same way it does in manufacturing or retail. If you raise prices on the basis of “inflation,” customers will quickly sense it's a strategic move, not a pass-through cost. Unless you have explicit, unavoidable delivery expenses, it’s usually smarter to tie any price changes to new capabilities or proven value gains, not to an economic headline.

With these insights in mind, let’s challenge the assumption that high inflation should automatically trigger a price increase in SaaS. Is it really a necessary step?

Challenging the “Inflation = Price Hike” Assumption

Let’s be blunt: high inflation doesn’t automatically mean you should raise your SaaS prices. Here’s why:

1. Your costs aren’t rising in step with inflation

As discussed, most of a SaaS company’s costs (R&D, cloud ops, support) are not directly tied to monthly inflation indices. By late 2023, inflation in many regions had begun to ease, yet SaaS prices kept climbing faster than consumer inflation. In fact, one analysis showed SaaS prices were growing 4x faster than broader market inflation rates.

That gap underscores that these price moves are strategic, not purely defensive. Unless you have specific evidence that your cost of delivering service has shot up (e.g. a major hike in API provider fees or a jump in the cost of an embedded third-party service), don’t assume you have to charge more just to stay afloat. Many software businesses maintained healthy (even improved) gross margins during the past two years without across-the-board price changes.

2. Customers don’t care about your margin; they care about value

Telling a customer, “Our AWS bill went up, so we’re raising your price 10%” won’t land well, especially if they also use AWS and know that’s not true. Inflation may explain a fuel surcharge on a plane ticket. It doesn’t explain a SaaS subscription. What customers will pay for is added value, better features, performance, support, or outcomes. If your product hasn’t changed meaningfully, a price hike feels like a cash grab.

And buyers are increasingly calling that out. Many suspect vendors are using inflation as cover to jack up prices without justification. That’s not the reputation you want.

3. The market rewards stability and punishes panic

When budgets are tight, customers value stability. If your competitors are hiking rates and you hold steady, that’s a chance to stand out. As Jason Lemkin advised, “If others raise 20% and you don’t, their customers might come knocking.”

You can win new business by saying, “We’re not hitting our customers with inflationary increases - we’re focused on delivering consistent value at a fair price.” This isn’t about undercutting but about long-term trust. A quick revenue bump this quarter can backfire next year if key accounts churn. Investors are looking for efficient, durable growth, not inflated ARPU with shaky retention.

4. There are other levers to protect margins

Raising prices isn’t your only option. In 2022-2023, smart SaaS companies leaned on cost discipline and monetization creativity:

Pausing hiring
Cutting unnecessary cloud spend
Reducing sales/marketing waste
Updating packaging or introducing usage-based pricing

OpenView’s data shows that pricing and packaging changes, like moving from per-user to usage-based billing can increase NRR by up to 14%. Even better, they often carry less churn risk than a blanket price hike. The key is to align pricing more tightly with how customers experience value.

5. Long-term relationships outweigh short-term ARR pops

Yes, raising prices 5-10% can lift MRR right now. But if that increase hurts retention, it could do more damage than good. Even a few lost customers can tank your LTV/CAC math. And that’s not even counting the expansions, referrals, and renewals you miss out on. “Upsetting customers to make a quick buck isn’t worth it. Instead, double down on long-term relationships.” The best pricing moves are tied to clear value. They feel earned. Customers should walk away thinking, “This is still worth it.”

Retention Is the New Battleground: Price Hikes Can Hurt More Than Help

In today’s market, retention is the name of the game. Many SaaS leaders have shifted from “grow at all costs” to protecting and expanding their existing customer base. Yet even top performers have seen retention soften. According to OpenView’s 2023 Benchmark, median NRR dropped from 119% to 107%, as upsells got harder and churn crept up.

Raising prices may boost NRR temporarily, if customers stay. But it can also push them out the door. Here's why price hikes demand caution:

1. Customers Will Re-Evaluate Alternatives

A price increase is often the trigger that snaps a satisfied customer out of autopilot. Suddenly, they’re comparing options. As Jason Lemkin notes, “Any increase, no matter how small, makes customers consider other vendors.” Switching costs are lower than ever, data is portable, and feature parity is common. A well-timed competitor pitch (“we’ll save you 20%”) gets traction. Even loyal customers may use your hike to renegotiate, downgrade, or leave.

2. Churn From Price Increases is Often Delayed - But Real

In B2B SaaS, especially enterprise, customers are usually on annual or multi-year contracts. A price hike might not lead to immediate churn, but it can quietly plant the seed. Some customers will reduce seats or walk at renewal. And because churn is a lagging indicator, you may not feel the impact for 12-24 months. By the time it shows up, the damage to your customer base is already done. So that short-term boost in MRR could be masking a longer-term growth headwind.

3. Trust and Goodwill Are at Stake

SaaS is built on relationships, not one-off transactions. And trust is the fuel that powers expansion, referrals, and long-term retention. If you raise prices and blame “inflation” without showing real product improvements, customers will notice. That’s exactly what happened in 2023, when some customer success teams saw it firsthand: customers started treating check-ins like sales calls, bracing for an upsell instead of expecting help. That shift signals trouble. Sure, a 5-10% bump might boost revenue short term.

But if it costs you a loyal customer who could’ve spent 10x more over time through renewals, referrals, and upgrades - was it really worth it? When trust fades, so does advocacy. Customers stop recommending you. NPS drops. Testimonials dry up. And they may quietly plan their exit at renewal. That’s why many SaaS companies held prices steady in 2022-2023. Those that raised them did it carefully.

HubSpot, for instance, grandfathered existing customers and only applied new pricing to new deals, rewarding loyalty while still increasing ARPU. Others paired increases with packaging upgrades to cushion the impact.

Price hikes may bring short-term gains but risk long-term damage if customers feel the increase isn’t justified by added value. The next sections illustrate this through real-world examples.

Strategic Price Increases: Lessons from Top SaaS Companies

Clearly, careless price hikes can backfire. But some companies managed to raise prices with more discipline, anchoring them in value, not just inflation. Others executed well operationally but still saw customer pushback, showing that even a “justified” increase needs trust to land smoothly. Let’s look at how three major players approached it and what we can learn from each.

Slack (2022) - First Price Hike in 8 Years, Framed by Added Value

Timing & Magnitude: In mid-2022, Slack announced its first-ever price increase since the company’s 2014 launch. The change took effect September 1, 2022 (below you can see the history of Slack offerings so far).

Slack’s Pro plan rose from $8 to $8.75 per user per month (annual Pro went from $6.67 to $7.25 per user/month) - roughly a 10% uptick.

Rationale: Slack was careful to justify the hike through the lens of customer value, not merely inflation or revenue needs. Over eight years, Slack had evolved from “just another messaging app” into a robust “digital HQ” with countless new features (integrations, security, workflows, Slack Connect, huddles, clips, etc.). To “reflect all of that added value” and continue investing in innovation, Slack positioned the $0.75 per user increase as a fair adjustment.

In its announcement, Slack explicitly highlighted the value enhancements to appeal to customers’ sense of fairness - making it clear they weren’t raising prices just because they could or due to cost pressures.

Slack also coupled the Pro plan increase with updates to the Free plan (removing the 10k message limit in favor of a more generous 90-day history, and adding features like clips for free users) to smooth the transition. Additionally, existing customers were given options to lock in old rates by switching to annual plans before the deadline, underscoring that this was a structured, well-communicated change.

Customer Reaction & Outcome: The market response to Slack’s pricing move was largely uneventful - which is exactly what Slack intended. The increase was modest and well-communicated, so there was no widespread backlash. Many admins took advantage of the chance to pre-pay annually at the old rate, indicating the rollout was anticipated and orderly.

Overall, Slack’s strategy paid off: the company realized higher ARPU in subsequent quarters without alienating its user base. By focusing on the added product value and giving customers ample notice and options, Slack’s first price change was tolerated rather than resented. The lesson was clear: a price hike anchored in clear customer benefits (as opposed to a reactive grab) can land with minimal churn.

Salesforce (2023) - 9% List Price Boost After Years, Justified by Innovation

Timing & Magnitude: In mid-2023, Salesforce announced it would raise list prices by an average of 9% across many core cloud products, effective August 1, 2023. This was Salesforce’s first broad price hike in seven years. Key offerings - Sales Cloud, Service Cloud, Marketing Cloud, Tableau, etc. - all saw roughly 9% higher sticker prices for both new and renewing customers.

Rationale: Salesforce tied its pricing rationale to the substantial increase in product value over the past decade, especially due to new technology like AI. The company pointed out that it had invested over $20 billion in R&D in the previous seven years, adding dozens of new features and recently integrated generative AI capabilities into its platform. In short, customers were getting a much more powerful suite than they were in 2016, and the pricing needed to catch up accordingly. The timing was also influenced by the macro climate: demand growth had cooled post-pandemic, and enterprise clients were optimizing spend.

A modest price increase was one lever to bolster revenue per customer in face of that slowdown. Salesforce was careful in its messaging to frame the 9% uptick as a reasonable adjustment after a long pause, explicitly citing the new value (AI and otherwise) being delivered. In essence, they attempted to make it about value gained, not just inflation or pressure to hit numbers.

Customer Reaction & Outcome: The announcement drew a mixed response. Investors welcomed the move - Salesforce’s stock jumped ~4% on the news, anticipating a boost to the company’s top line. And indeed, many customers rushed to renew contracts early (before August) to lock in the old rates, giving Salesforce an immediate short-term revenue lift. However, some customers were less enthusiastic. Cost-conscious clients started “considering switching to Microsoft or HubSpot” in response to the higher CRM fees. Competitors seized the moment in marketing, aiming to poach any discontented accounts.

To be fair, actual defections were limited - largely because Salesforce’s depth of features and ecosystem were hard to replace overnight. But the grumblings underscore an important point: even a justified price increase can test customer loyalty if not paired with clearly perceived value. Salesforce had to ensure its new AI and platform improvements truly translate into ROI for customers to keep them onside. The early results were positive for revenue.

But the company’s handling of customer communications and flexibility (e.g. offering cheaper editions or allowing partial upgrades) was the only way to determine the longer-term outcome. The takeaway: a price hike from a market leader can succeed, but it must be accompanied by credible value narratives and vigilance toward competitive pressure - a purely opportunistic increase would have risked a bigger backlash.

Key takeaway: The recent period saw many SaaS companies - from startups to public giants - resort to price increases as a quick fix to counter macro headwinds. But those moves, especially when not accompanied by added value, have set the stage for potential customer frustration. Before assuming your SaaS should follow the same path, it’s important to examine whether inflation truly necessitates a price hike in software.

monday.com - Value-Driven Price Hike and Modular Packaging (H1 2024)

What Changed: Work management platform monday.com undertook a significant pricing overhaul after years of rapid product expansion. In January 2024, the company announced its first across-the-board list price increase since 2019, affecting all plans (Basic, Standard, Pro, Enterprise) and newer products like monday Sales CRM and monday Dev. New customer pricing jumped roughly 15-20% per tier (e.g. Pro plan from $16 to $19 per seat/month) effective January 11, 2024, with existing subscribers seeing the increase upon renewal after Feb 16, 2024. Then, by July 2024, monday.com unbundled its platform into individually priced products (Work Management, CRM, Dev, etc.), moving away from one-size-fits-all pricing. Early adopters of multiple products were offered transitional discounts during this packaging shift.

Rationale: Monday.com justified the price hike by pointing to the massive growth in its offerings since the last update. In those years, they had delivered “over a thousand new features” - launching entirely new products (CRM, Dev), an AI assistant, a faster database engine, advanced security features, and more. In short, customers were getting a far richer platform than in 2019, so the pricing was updated “to maintain a competitive and cost-effective price point” relative to that value. The later decision to price each product separately was driven by a desire to let customers pay only for the modules they use (value alignment) and to enable clearer scaling of each product.

Customer Reaction & Outcome: Monday.com’s user base, which includes many SMBs, largely took the increase in stride - helped by the fact that it was the first raise in ~5 years. The company communicated the changes through detailed blogs and support articles, outlining the new features and improvements behind the decision.

This transparency, plus giving existing customers a grace period until renewal, kept churn minimal (leadership noted only a 1-2% revenue uptick from the change, indicating no mass cancellations). The move to à la carte product pricing was also seen positively by customers with specific use cases, though some who enjoyed the all-in-one bundle had to assess costs if they used everything.

Takeaway: Don’t let pricing lag too far behind product value. Monday.com shows that if you continually expand your product but never adjust pricing, you’ll eventually need a catch-up increase - and you can do so successfully if you clearly articulate the added value. Their two-step 2024 strategy (raise core prices, then modularize the offering) underscores the importance of structuring pricing to how customers derive value: they pay more when you’ve delivered more, and they can choose (and pay for) only the product capabilities they need. The key is communication - Monday.com accompanied its changes with explicit lists of new features and improvements, reinforcing why the new pricing makes sense.

HubSpot - Seat-Based Model Shift to Fuel Adoption (Q1 2024)

What Changed: In early 2024, HubSpot executed a major pricing model shift aimed at simplifying how customers buy its CRM and marketing software. Effective March 5, 2024, HubSpot moved all its Hubs (Marketing, Sales, Service, CMS, etc.) to a per-seat pricing structure, introducing the concept of “Core Seats” and “View-Only” users. Under the new model, each Core Seat (paid user) has full editing access and includes all AI features, while unlimited View-Only seats are free for colleagues who only need to view data. This also eliminated the old requirement for certain hubs where customers had to buy a minimum number of seats - now teams can start with just one paid user if needed. For new customers, the shift meant some list prices were about ~5% higher, but with a lower barrier to entry (no bulk seat commitments). HubSpot grandfathered existing customers on legacy pricing to avoid disruption.

Rationale: HubSpot’s leadership framed this move as a way to enhance flexibility and scalability for customers, aligning pricing with how organizations actually use the product. Instead of charging, say, based on database size or imposing bundle fees, HubSpot now charges for the value-driving users of the system (sales reps, marketers, service agents) while enabling broader team collaboration via free view-only access.

In their Q4 '24 shareholder letter, HubSpot noted that by “lowering initial prices and removing seat minimums, we made it easier for teams to start and grow with HubSpot, accelerating customer acquisition and driving seat upgrades”. The inclusion of AI capabilities with every Core Seat was a strategic choice to boost adoption of new AI tools (positioning HubSpot as an “AI-first” platform) without complicating the pricing - AI is a value-add rather than an extra fee. Reaction: The market reacted positively to the pricing overhaul.

Many customers, especially smaller businesses, appreciated the lower friction to get started - they no longer have to overbuy licenses or worry about paying for infrequent users. Analysts observed that the change “laid a strong foundation for growth” in HubSpot’s down-market segment by driving a notable uptick in new customer sign-ups and expansion within teams.

Existing customers were relieved to be unaffected immediately, and HubSpot’s transparent communication (blog announcements, podcasts, and direct outreach explaining the new model) smoothed the transition. There was some initial confusion about how marketing contacts are handled under the new scheme, but HubSpot provided clear documentation to clarify that core pricing is seat-based while certain usage (like contact tiers) still applies in Marketing Hub.

Takeaway: Simplifying your pricing model can unlock growth if it better aligns with customer value delivery. The lesson for SaaS leaders is to ensure your pricing structure matches how customers get value from your product (e.g. users, capacity, outcomes) and to communicate changes with empathy. Done right, a model change can drive faster adoption and revenue growth, all while keeping customers on board with the rationale that they pay for what they use and benefit from.

Practical Guidance: A Value-First Pricing Strategy in an Inflationary Era

How should SaaS leaders handle pricing during inflation? Here’s a practical, outcome-driven stance.

1. Make Value Your North Star

Before thinking about inflation, ask: Have we delivered more value to customers? If your product has improved, usage is up, and outcomes have increased, that’s a solid foundation for a price update. If not, a hike will feel arbitrary. Pricing should follow your value curve, not macro headlines.

2. Avoid Across-the-Board Percentage Hikes “because inflation”

Raising all plans by “10% because inflation” is lazy, and risky. Most enterprise deals already have 3-5% annual escalators built in. If you need to adjust, do it surgically:

Increase prices only on specific tiers or modules
Tie hikes to added features or capacity
Communicate clearly why the change reflects more value

Generic, across-the-board increases ignore how different customers use your product and invite pushback.

3. Communicate Early With a Customer-Centric Framing

If you raise prices, tell customers why, and what they’re getting.
Example: “Over the last 24 months, we’ve rolled out features A, B, and C. To keep investing at this pace, your subscription will adjust to $___ at renewal.”

Give notice. Talk to key accounts 1:1. Let customers choose:

Lock in old pricing with a multi-year renewal
Trim unused add-ons to stay flat
Downgrade if they’re over-served

The more flexible and transparent you are, the better it lands.

4. Don’t Penalize Early Adopters

Think twice before raising prices on your long-time customers who “made a huge bet on you” in the early days. If anyone deserves grandfathered pricing or special care, it’s them. They’re often a small slice of ARR, but a big source of goodwill. Many SaaS firms apply new pricing only to new customers or new expansions. That’s a smart compromise.

5. Monitor Like a Hawk

After a pricing change, track the data closely:

Logo churn
Contraction MRR
Support volume or sentiment
NRR shifts over two quarters

Look for leading indicators: more downgrades, less usage, or renewal hesitations. If a change backfires, be ready to adjust. Don’t wait a year to find out what customers already know. Put a proactive retention plan in place.

6. Rethink Monetization Strategy

Inflationary times are a good prompt to revisit your overall monetization approach. You don’t always need to raise prices to increase revenue.
Many SaaS companies in 2022-2023 added:

Usage-based components
Paid add-ons (support, payments, AI)
Hybrid models (subscription + consumption)

For example: keep your base plan flat, but start metering heavy usage. This lets power users pay more without penalizing low-usage customers, aligning price with value naturally.

7. Show the ROI

Customers under budget pressure ask: Is this tool worth it? Before a price increase (or even as a general practice), provide a value report or business review that quantifies the benefits they’re getting - time saved, revenue gained, efficiencies, risk reduced, etc. If a customer clearly sees they get $5 of value for every $1 spent on your product, a 5-10% price uptick becomes easier to swallow. This turns the conversation from “cost” to investment and return. Many SaaS companies have shifted Customer Success towards this kind of customer value management, which pays dividends when pricing comes up.

8. Consider the Broader Economic Relationship

Some sectors, like retail or manufacturing are under massive inflation pressure. For them, your hike may be poorly timed. But if they’re in a boom sector((AI, fintech, logistics) or have been regularly increasing their own prices, they might be more amenable to vendors doing the same. Also consider global pricing. Currency volatility means a 10% USD bump might hit international customers much harder. Top SaaS companies adjust pricing by region and WTP, not just FX tables.

In sum, Inflation doesn’t justify sloppy pricing. Value does.

Be deliberate
Be customer-first
Be operationally sound

Raise prices only when you’ve earned it and when you’re prepared to defend it. That’s how sustainable monetization works.

Conclusion: Focus on Value, Not Just Inflation Metrics

In SaaS, value is the ultimate price anchor, not marginal costs or passing trends. In short, don’t let a macroeconomic headline dictate your pricing strategy. Challenge the conventional wisdom that inflation = across-the-board price hikes for SaaS. Your business is not the gas station or the grocery store - you have the flexibility to prioritize customer success and value creation. By doing so, you’ll build the kind of enduring customer relationships and efficient growth that outlast any one inflation cycle. And when you do adjust pricing, your customers will understand it’s based on value, not just the tides of inflation.

If you’re ready to move beyond quick revenue fixes and start pricing in a way that genuinely reflects customer value, Monetizely is the best place to be. Our structured, segment-focused, and operationally sound approach is designed to capture true willingness-to-pay, without boiling the ocean. Get your free pricing assessment from our SaaS pricing experts today. Let’s help you make $$$.