SaaS Contract Framework for Price Increases

Hey folks. I'm currently working on optimizing price increases which has me re-evaluating how we've structured our commercial agreements. Right now most of our customers sign a one year contract term then ~3 months before the term ends our reps start their outreach to engage in renewal conversations asking for another one year contract. Also, most of our contracts have price increase language that states we'll increase their price at the greater of CPI or 5% at renewal. We have a lot of these agreements setup to auto renew, but even if that's in place we try to get customers to agree to the renewal terms so there are no surprises when they get the invoice. We have 4K+ customers so there's a lot of energy going into just renewing existing customers.

This has got me thinking about trying to propose moving to agreements that are more "evergreen" and require less renewal effort.

@Ulrik Lehrskov-Schmidt

's book has a Contract Framework that paraphrases a cancellation clause as "Customer is a customer of SaaS business until Customer chooses to cancel this contract as per cancellation terms." I'm curious how this works in practice. I guess we could still have customers commit to an initial one year term then after one year just have it say in the contract that they (or we) can cancel with 30 days notice. That would solve the problem of the labor intensive renewal discussions. What I'm not sure how to solve for is payments. We would still want to have most customers pay annually so if they paid for 12 months then canceled effective end of month 3, we'd have to refund them 9 months of the payment.

Additionally, I want to get rid of 5% or CPI price increase language and just have the contract state that we can increase price with 30 days notice. This gives us a lot more flexibility with executing price increases as right now we're pretty much stuck with only being able to increase price at renewal.

I'm curious if any of you have experience with best practices here. Is there a way to get out of these painful renewal motions without moving to a monthly subscription? Even just understanding the most common B2B SaaS Contract Frameworks as it relates to renewing customers would be really helpful.

Thanks!

Steve

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