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How I successfully doubled my SaaS price to $10/month and lowered the churn rate to 3%

Takuya Matsuyama

Takuya Matsuyama

— 11 min read
How I successfully doubled my SaaS price to $10/month and lowered the churn rate to 3%

Hey, what's up? This is Takuya. Most people know me as a content creator on YouTube, called DevAsLife, but I consider myself as an indie developer who has been running a profitable SaaS for a long time. I've been sharing my journey of building Inkdrop, a note-taking app solely designed for software developers.
It's already been 8 years — time flies! This year (2024), I made the biggest decision I have ever made since Inkdrop launched, that is, a price increase.

On January 22nd, I announced that effective February 5th, the price of Inkdrop would increase from $4.90/month ($49.90/year) to $9.98/month ($99.80/year). I also explained why this change was necessary in this forum post:

Inkdrop Price Change
Hey Inkdroppers, I’m writing to let you know that, effective February 5th, I will be increasing the price of Inkdrop from $4.9/month ($49.9/year) to $9.98/month ($99.8/year). This will be the first price change in 7 years. Let me explain why I’m making this change. TL;DR I don’t want to chase numbers but I do want to follow my heart and create what I want to use, read, and watch. This approach works best with a smaller scale of supporters, not with tens of thousands of paying customers. So…
Inkdrop Forumcraftzdog

Now, it's been about 9 months since the price increase. I'd like to share how things have been going. Was it the right decision? Should you try it for your SaaS as well? What are the important lessons I learned? Let's get right into it.

The video version is also available:

Got the first MRR growth since the price increase!

Let's take a look at the MRR (Monthly Recurring Revenue) chart since the service launch:

(Note: Sorry, I've hidden the Y-axis values, but Inkdrop already hit $10k+ MRR years ago, as I mentioned in my interview on Indie Hackers.)

As you can see, there have been some epic moments in the history, which I’ll discuss throughout this article. Running a SaaS over the years has not been easy; there have been many ups and downs, as shown in the chart.

I’m excited to report that this October marked the first growth in MRR since doubling the price back in February! Yay!

Why I increased the pricing — Rethinking the target

Changing the pricing will significantly impact the customer tiers. You can get a lot of customers with the low price; however, it can lead to some negative consequences, as Arvid Kahl points out:

Significantly underpricing your product will create a few problems down the road. (...snipped...) Price always communicates value. By pricing a product surprisingly low, you are saying that it is worth very little. That will scare away customers who are looking for high-quality products.

— by Arvid Kahl, Zero to Sold

As a non-VC-backed indie developer, I wanted to make Inkdrop better rather than bigger by focusing on quality. I wouldn't like to make it like MS Office or Adobe products to catch 'em all. I wanted to enjoy dense communication with my loyal customers instead of mindlessly saying 'yes' to every feature request that will never be implemented. Therefore, increasing the price was primarily intended to address issues with my current customer base.

"Address issues"? — Yes, I encountered some challenges with my customer base.

I attracted the wrong customers from my channel, but I wanted to keep making video content

As you can see in the MRR history above, there was a huge revenue spike in March 2022. I unexpectedly attracted a lot of users via my YouTube channel.
However, they signed up not because my app looks good, but out of curiosity from my videos. Most of them didn't actively use my app even after paying for it.
Unfortunately, this traction made my SaaS business unhealthy, resulting in high churn rates and a high volume of user support requests.
To be honest, I initially assumed that attracting a large number of users, regardless of who they were, was a positive outcome. But, it turned out that this was not the case. Then, I've experienced a prolonged plateau, which has been affecting my tranquility. I needed to change my marketing strategy.

While my channel happened to attract the wrong customers, I've been enjoying making beautiful video content. I wanted to continue doing it.
So, it must contribute to my business somehow. I rethought who my right customers should be. It looks like the majority of my audience is aspiring software developers who want to improve their programming skills.
They said in the comments that my content was not only informative but also motivational. Many of them seemed to struggle with maintaining their motivation, which is something I can personally relate to. So, I realized that this could be another 'itch' my SaaS could help solve.

Therefore, I decided that my new marketing strategy would be to motivate people through my content and then help them take action with Inkdrop. This way, my channel fans can find value in Inkdrop while supporting both my app and my channel.

Focus on quality, not scale

In order to implement my new marketing strategy, I decided to increase the price because it would let my wrong customers leave. With a smaller group of happy customers, I should be able to have more meaningful and dense communication with them. By incorporating my motivational vibes as an additional value, this should create a synergy between my product and channel, allowing me to keep enjoying making beautiful content while focusing on improving product quality.

Making billion dollars is not my goal here. I'd like to enjoy a good digital creator life with good income from good, like-minded people.

Incorporating my motivational vibes into my SaaS has been a big challenge. This is so-called 'branding' in marketing terminology. I explained the details about the branding part in this video. It sounds a bit vague and I wasn't even sure if it would work. So, this report would be a progress report on this new marketing strategy. I believe it is gradually starting to work.

Be transparent: I got only one dispute

Increasing the price is super scary; my situation was not the exception.

After the announcement, I updated all the existing subscriptions to the new plans by using Subscription schedules via Stripe. I was worried that some customers might get angry because they were charged under the new pricing without explicitly agreeing and potentially dispute the payment.

Fortunately, it turned out that the number of disputes didn't significantly increase after the price change. I received several complaints via emails and comments though, I actually got only one payment dispute. The rest were due to card fraud.
As you can see in the chart below, Inkdrop rarely gets disputes.
So, the card payment flow seems to still be very healthy.

Dispute Count

Why I didn't get disputes is likely because I tried to reach out to my customers via all the channels I have, including:

I tried to be transparent as much as possible instead of deceiving or surprising people. This approach was very important to avoid getting disputed.

Let the wrong customers go and focus on the happy customers

As I mentioned earlier, letting go of the wrong customers and making the service healthy again was a crucial part of this strategy. A rush of cancellations from the existing subscriptions was expected, but it still caused massive anxiety and stress for me, as you can imagine. It was like a roller coaster ride. 🥶

The churn rate immediately doubled from ~4% to 9% after the announcement.
Fortunately, it gradually decreased and now seems to be eventually normal like ~3% after 9 months. Many customers left — It was tough though, I'm so relieved by the results! But, how I accomplished it?

Churn rates

Here's what I did to retain my right customers and improve the churn rate:

  1. Post customer education video tutorials in an entertaining format
  2. Create a user-only Discord server and host online meetups
  3. Ask my customers to post a testimonial and put 'a wall of love' on the website

1. Post customer education content — Don't forget to entertain!

My users from YouTube tend to be visual learners, so I created video tutorials on how to use Inkdrop and provided tips for tech note-taking, as promised in the announcement:

As you can see, they are not just standard screencasts with my face presenting the app features, which you often see with other services.
I created a dog mascot that animates and speaks as my companion in the videos.
He asks questions, reacts to my presentations, cries, and gets excited emotionally.
His cute behavior makes my tutorials enjoyable to watch, which can often be a boring experience otherwise.
I tried to make them not only informative but also motivational, with high quality editing.

2. Meet my loyal customers in person online — Build a warm community

Happy customers are usually quiet and don't say anything unless something goes wrong, like encountering bugs. It's rare to see them actively engage with me to discuss how we could cooperate.

Although the user forum has been a great place for giving user support, accumulating troubleshooting knowledge, and discussing feedback, communication has primarily been one-on-one interaction between me and the users. I wanted to connect active users with one another and energize the community, but this was challenging on a problem-solving-focused user forum.

So, I worked hard to engage with happy customers by starting a user-only Discord server and hosting online meetups. 3-5 people typically join on each online meetup. We've talked about interesting new technologies, discussing new features, their jobs, projects, and indie dev Q&As, and more. Talking with my customers in person was an eye-opening experience for me:

In addition, it was wonderful to know what each of my loyal customers is like, what they are interested in, what they expect from me, and so on.

To be honest, I don't really like chats because they can be so distracting. However, by setting a paywall (Inkdrop) to join the server, the members have become very constructive and supportive, so I was able to keep my tranquility while enjoying conversations with people from time to time.

I will keep experimenting with ways to engage on the server!

3. Visualize how much happy my customers are

People tend to check what others think if they are unsure.
Since my user base is small, word of mouth is rarely visible on social media.
While some people told me they recommended Inkdrop to their friends, it'd be nice to encourage my customers to post their reviews publicly somewhere.
Testimonials greatly help other people decide to sign up and continue using Inkdrop.
To facilitate this, I added a link to a testimonial form on the page that appears right after the payment process, and I've got over 25 testimonials so far, which is amazing!
Here is the wall of love:

Trusted by developers around the world
Senja is the easiest way to collect, manage and share testimonials, online reviews and feedback from your customers.

These experiences have greatly encouraged me to keep it going.

Overall, instead of chasing the numbers, focusing on the happy customers eventually helps the churn rate return to normal.
I will try keeping it to around 3%.

My customers are my patrons

Inkdrop is not a fully automated source of passive income.
I'm still the sole developer behind it. The revenue is like the claps from my customers, saying, "keep it going!" So, I have to keep thinking and running.
Well, what is my main motivation now?

My marketing strategy isn’t a short-term growth hack; it’s about finding the sweet spot of my life style, where:

  1. I build what I want to use
  2. I publish what I want to learn/enjoy
  3. I surround myself with those I want to connect with

My primary goal is to cycle these activities and improve my lifestyle. The revenue is the fuel to enhance each of these aspects — Making better product, making better content, and connecting with more interesting people.

When things are not going well, it's tempting to generate engagement through clickbait and drama. But you should never do any of them because those tactics are not sustainable and you will lose your authenticity. You should always focus on making your core fans happy. That's what I've been working hard on: attracting the right customers who will support all my activities for the long term, like true patrons.

Sustainability: Make the business hard to steal

Lastly, I'd like to emphasize that these efforts are also for making my business harder for competitors to steal. The note app market is a red ocean here. Inkdrop is a simple Markdown note-taking app, especially designed for software developers. While this app concept might sound like a niche market, when searching for note-taking apps, you'll find tons of similar apps that overlap with the area (e.g., Notion). That's largely because features can be easily copied and replicated, no matter how much effort you put into adding them. Over the years, I've witnessed so many new apps emerge, replicate shiny features, and then fade away. So, relying solely on a feature set won’t make sure the sustainability of your SaaS.

On the other hand, it's significantly harder to copy brands and communities.

  • Can you steal my entire YT channel audience by replicating my video style?
  • Can you steal all my community members by replicating my Discord server?

These are integral parts of the Inkdrop's value that actually contribute to its MRR now.

Many developers believe that features solve everything, and that branding themselves and building a warm community have little to do with growth, but are just minor things. I thought the same way, too, before starting my business, and I was wrong. You should learn marketing, and you should find elements that would make your SaaS unique — not just the features. And from my experience, building a strong brand and community helps lower churn rates.

With the low churn rate, I can now feel safe to work on improving the app.
I think it's wrong to drive yourself with intense anxiety. As I repeatedly say, sustainability is key for indie development. I'm not interested in pursuing sky-rocketing growth. I'd like to enjoy building what I want to use, publishing what I want to learn/enjoy myself, and surrounding myself with lovely people.

Thanks so much for reading it. I hope it's helpful for your indie development!

Inkdrop - Note-taking App with Robust Markdown Editor
The Note-Taking App with Robust Markdown Editor
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