Setting Renewal Price Increases Based on Actual Usage

The annual renewal increase is usually a single number applied to everyone. Finance picks a percentage, it goes into the renewal notices, and the customer success team absorbs the reaction.

That approach treats a diverse base as one customer. It overcharges the accounts barely using the product, who are the ones most likely to leave over it, and undercharges the accounts that have quietly tripled their usage since they signed.

Usage data turns one decision into a set of better ones.

What the uniform increase gets wrong

Consider two customers paying the same amount on the same plan. One logs in weekly and uses two features. The other has rolled the product out to three departments and runs core workflows through it.

A uniform increase asks the first customer to pay more for something they are already unsure about, and asks the second for an increase that is small relative to what they now get.

The first customer is a churn risk you created. The second is revenue you left on the table. Both outcomes came from the same decision.

The segments that matter

Joining billing data to product usage data produces four groups, and each one calls for a different answer.

High usage, low price. These customers get more value than they pay for. They can absorb an increase above your standard rate, and the conversation is straightforward because the usage data supports it.

High usage, high price. Already well matched. Standard increase, or none, depending on competitive position. These are your reference accounts and the relationship is worth more than the increment.

Low usage, high price. The dangerous group. An increase here is likely to trigger a cancellation or a hard renegotiation. The right move is usually not an increase but an adoption conversation, because a customer who is not using the product will leave eventually whatever you charge.

Low usage, low price. Small accounts where the cost of a careful conversation exceeds the revenue. A standard increase is fine, and some attrition is acceptable.

In text: 1. Join billing to product usage per account 2. Place each account in a usage and price quadrant 3. Set the increase per segment, not per base 4. Give the low usage, high price group an adoption plan

This needs the baseline, not a spreadsheet

Solutioneers pricing work builds a baseline from billing, CRM, product usage and cost data, and renewals are one of the clearest cases for why all four are needed together.

Billing alone gives you what each customer pays. Usage alone gives you what they do. Only the join tells you whether those two things are in a sensible relationship.

The CRM adds the history: what was promised during the original sale, which accounts have an open escalation, which have a competitor in the account. An increase sent to a customer with an unresolved support issue is a cancellation with extra steps.

Cost data matters where usage drives real marginal cost. A high-usage customer who is expensive to serve is a different proposition from a high-usage customer who is not.

The conversation is easier with evidence

A uniform increase cannot be justified to an individual customer, because there is no reason specific to them. The only available answer is that prices went up.

A usage-based increase comes with its own argument. The account has grown from forty users to two hundred, or doubled the volume it processes, or adopted three capabilities it was not using at signature. The increase reflects what changed.

That is a conversation a customer success manager can have without escalating, which is itself worth something.

Pricing ownership decides whether this happens

The reason most companies default to the uniform increase is not that they think it is optimal. It is that nobody owns the alternative.

Kyle Poyar's 2025 State of B2B Monetization found that between $5M and $20M ARR, pricing ownership often falls between teams, and that most companies were unprepared to keep up with pricing changes because of personnel gaps and legacy tooling.

Segmented renewal pricing is exactly the kind of work that falls into that gap. It is more analysis than finance wants to do for a renewal cycle, more commercial judgement than customer success is usually asked for, and not owned by product at all.

Start with one quadrant

The full segmentation does not have to land at once. The single highest-value step is identifying the low usage, high price group before renewal notices go out, because that is where the avoidable churn is concentrated.

Pulling those accounts out of the standard increase and routing them to an adoption conversation is a small operational change that protects revenue you would otherwise lose without knowing why.

If your renewals are running on a single percentage, our pricing and packaging work builds the baseline that makes a segmented approach possible.

Related reading: Moving Existing Customers to New Pricing Without Losing Them and The Four Data Sources Every Pricing Decision Needs.