The Power of Positive Friction: How to Get More Customers Moving Up Your SaaS Pricing Tiers

Are you having a hard time getting your customers to move across your pricing packages? Don't worry; you're definitely not alone. 😅

Recently, I spoke to a founder who was experiencing a similar issue.

They found that a whopping 45% of their customers stayed in the lowest tier of their pricing model instead of upgrading to higher-priced plans. 😬

It can be super frustrating to see customers not getting the full benefit of your product, and it can even leave you feeling like you're leaving money on the table. 😞

But here's the good news: there's a way to encourage your customers to upgrade and get the most value out of your product : positive friction. 💡

To me "positive friction" is best described as the feeling you get when you're using a product and successfully solving your problem, feel great about it, and want to do more. For example, take Calendly. You start using the platform, set up your first event type, book a few meetings with it, and realize the value of not having to coordinate schedules. You think to yourself, "I want more of this!" But to get more, you need to move up to the next tier, which has unlimited event types. No problem… take my money!

Here are some steps to help you create positive friction and encourage upgrades using limits:

Step 1: Revisit your value metric and ensure it aligns with your customer's growth. Getting as close as possible to the moment your customers get value is crucial. You can tell if your metric is effective by asking yourself a few questions, such as: is it easily measured? Is it easy to understand? and is it highly correlated with the value you deliver?🔎

Step 2: Add limits to the amount of the value metric that a customer can consume in the lower-tiered plan. This has a two-fold impact:

👉 It adds positive friction and encourages upgrades as customers bump against the usage limit, and

👉 it can make the higher-tier plans feel more valuable.

Step 3: Take a look at the features in the lowest plan and see if they might also be candidates for limits. If there's too much value in lower tiers and customers don't see the need to upgrade, adding limits to these features can create urgency and encourage upgrades. This is particularly effective for features that are core to your value, and removing them from the plan would frustrate and stop the customer from fully adopting your product.

Remember not to limit too many things, as it can quickly confuse your customers if they have too many variables to track. 💪

So, if you feel like you've got too many customers hanging out in your lowest tier, consider adding limits to your value metric and key features to create positive friction and encourage upgrades.

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