Most SaaS companies don't know their price elasticity. Here is how to estimate it before committing to a price increase.
Method 1: New customer A/B test
The cleanest approach: run two cohorts of new prospects at different price points. Split incoming leads randomly — 50% see the current price, 50% see the higher price.
Measure: trial-to-paid conversion rate and time-to-close. If conversion rate drops < 15% for a 20% price increase, you are inelastic.
Method 2: Cohort analysis (retrospective)
Look at customers who were grandfathered at old prices vs. customers who started at the current price. If retention rates are similar, willingness to pay is higher than current pricing.
Method 3: Willingness-to-pay surveys
Van Westendorp Price Sensitivity Meter: ask 4 questions: 1. At what price is this product too cheap (low quality)? 2. At what price is it a bargain? 3. At what price is it expensive but worth considering? 4. At what price is it too expensive to buy?
The optimal price range falls between the intersection of "too cheap" and "too expensive."
Signals of inelastic SaaS pricing
- High NPS (customers who love the product rarely price-compare)
- Low churn (switching cost > price sensitivity)
- Deep workflow integration (embedded in daily operations)
- Clear ROI (customer can quantify what they get back)
If any three apply, you likely have inelastic demand and can raise prices by 15–25% with minimal churn impact.
Use the price elasticity calculator to model the revenue impact of a price change at any elasticity value.