Legacy pricing in SaaS businesses refers to retaining old pricing plans for existing customers of a company. New pricing plans will be applicable only to new customers. Legacy pricing allows a company's existing customers to continue paying the same price for a product/service although the company's new customers have to follow new pricing. This pricing model is followed by many SaaS subscription-based companies.
Why it matters
The concept of legacy pricing is important in SaaS businesses since it allows companies to focus on customer retention by developing better relationships, especially with old-time customers. With this clause, businesses can also maintain the trust and loyalty of long-term customers. It can also have strategic advantages that help businesses move customers onto plans with higher prices. It acts as a reward for long-term customers through temporary rate reduction. However, companies must be careful to keep a limited grace period for legacy prices and this should be clearly communicated to customers.