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← Statistics glossary

grandfathering

Also called: grandfathered pricing, grandfathered plan, grandfather clause

Letting existing customers keep their old price or plan after a price increase, for a limited time or forever, while new customers pay the new price.

Grandfathering means that when you raise prices, the customers who already pay keep their old price, either for a set period or permanently, and only new customers pay the new price. The old price becomes a legacy plan that can no longer be chosen.

It's the gentlest way to raise prices. Existing customers don't feel punished for trusting you early, churn doesn't spike, and new customers never knew the old price. It also makes a price increase much easier to test: you see how new customers react to the higher price before anyone who's already paying is affected.

The cost is that the revenue gain arrives slowly, and permanent grandfathering can leave a large share of customers on a price that no longer covers what they get. A fair middle path is time-limited grandfathering: announce the new price well in advance, keep existing customers on the old one for a clear period (for example, a year), then move them over with a reminder before the change. Whatever you choose, say it in writing and keep the promise; broken price promises are remembered.

Example

In November GarageDesk announces a new price from 1 January of year 2: new shops pay 750 UAH a month or 7,500 UAH a year. The 64 existing shops keep 600 UAH a month for all of year 2 and move to 750 UAH after that; yearly customers renew at 6,000 UAH through year 2. Five of those shops prepaid before a line of code existed, and a year of notice keeps their trust.

For a shop that joined in year 1 on the monthly plan, year 2 costs 12 × 600 = 7,200 UAH and year 3 costs 12 × 750 = 9,000 UAH. When the step comes in January of year 3, about 60 shops still on 600 UAH move up: 60 × 150 = 9,000 UAH more MRR without a single new shop.

Common mistakes

  • Grandfathering forever by default. Years later, a big share of customers pays far below the value.
  • Short or no notice. Give existing customers months, not days, and a reminder before the change.
  • Vague promises. "For now" invites disputes; state the end date in writing.
  • Breaking the promise. Moving customers early costs more trust than the extra revenue is worth.