StreamFlow is a B2B workflow automation SaaS company serving mid-sized e-commerce brands. The company has 4,000 customers across three plans and generated $24M in annual recurring revenue last year. StreamFlow is profitable but margin pressure has increased because cloud infrastructure costs rose 18% year over year, while competitors have begun discounting aggressively. Management is considering a price increase on its core Professional plan and wants to understand the likely impact on customer volume, revenue, and overall profitability before making a decision.
You are the strategy manager advising the CEO. The proposed change is to raise the monthly price of the Professional plan from $500 to $550 per account starting next quarter. This plan is the company’s largest segment and the main source of contribution profit. Leadership believes the product has strengthened over the last 12 months, but the sales team is concerned that higher prices could reduce new customer acquisition and increase churn among existing accounts. The CEO wants a recommendation on whether to proceed, and if so, how to implement the change.
| Metric | Basic Plan | Professional Plan | Enterprise Plan |
|---|---|---|---|
| Current monthly price | $200 | $500 | $2,000 |
| Customers | 1,500 | 2,000 | 500 |
| Gross margin | 75% | 82% | 88% |
| Monthly logo churn | 3.0% | 2.0% | 1.0% |
Additional data for the Professional plan: