Before the board approves a price change, war-game the grandfather clause that comes with it. Decide which existing customers keep their old price, for how long, what ends the protection, and how they step up to the new price. Then price the carve-out by year and check it against the revenue plan, which often counts on uplift the clause gives away. Paste both price lists, customers with pricing and renewal dates, the draft terms, and the revenue plan into one request. Instruct Pingpong to flag protections with no end date, loopholes that let protected customers grow at old prices, conflicts between the clause and the plan's revenue assumptions, and groups who will see the policy as unfair. Review your written answers in a second round.
This page is for executives setting the legacy-price policy that goes to the board with a pricing change. The change itself is covered in war-game a pricing change before the board books the revenue. Executive starting points live under Pingpong for executives.
The choices inside a grandfather clause
- Who qualifies: all existing customers, or groups by size, tenure, or plan.
- How long: a fixed period, until next renewal, or indefinitely.
- What ends it: a plan change, a lapse in payment, or adding seats or products.
- The step-up: straight to the new price, or in stages.
- Multi-year contracts: honored to term, with the step-up at the next renewal.
- Exceptions: who can extend protection, and how it is logged.
What the carve-out costs
Every protected customer is revenue the price change does not collect. A generous clause can cancel most of the increase for years, and the board sees it only when renewals miss plan. Loopholes often cost more than the headline period. If protected customers can add seats at the old price, your fastest-growing accounts, the ones the increase was meant to reach, keep the legacy rate as they expand.
Fairness, as customers see it
Customers compare notes. A long-tenured small customer who learns that a large account negotiated a longer protection feels punished for loyalty. A new customer who learns an existing one pays a fifth less asks sales for the same deal. Customer success teams know which policies they can explain. A clause that treats groups differently needs a reason a customer would accept when it is stated plainly.
A worked example
This example is illustrative and does not describe a customer. A software company plans a 20 percent increase on its core plan. About 1,800 existing customers, worth $30 million in annual recurring revenue, are affected. The draft clause protects every existing customer indefinitely. The revenue plan counts $4 million of uplift from existing customers next year.
The finance leader pastes the price lists, customer list, draft clause, and revenue plan.
A useful pass finds that indefinite protection conflicts directly with the $4 million in the plan, which the clause makes impossible. Protected customers can add seats at the old price, and the top 50 accounts are adding seats fastest. Small customers, most of the count but about $5 million of revenue, carry the highest churn risk. Multi-year contracts and exceptions are not addressed.
The revised clause protects customers below $10,000 a year for 24 months. Everyone else keeps the old price until their next renewal, then steps up in two stages: 10 percent at renewal and 10 percent a year later. Seats added more than six months after the change are priced at the new rate. Multi-year contracts are honored to term. Only the finance leader can grant exceptions, and each one is logged. Counsel reviews contract terms before notices go out 90 days ahead. The model shows about $2.1 million recovered in the first year and $5.2 million in the second, assuming 3 percent added churn among stepped-up customers. The plan's $4 million becomes $2.1 million.
What the board sees
- The carve-out's cost by year, against the full value of the increase.
- Any change to the revenue plan the clause requires.
- The groups treated differently, and the reason for each.
- Churn assumptions for customers who step up.
- Who can grant exceptions, and how they are reported.
Discount rules on new deals are a separate policy, covered in war-game a pricing floor before the board signs off on discounts.
A request you can copy
Below are our price lists, customers with pricing and renewal dates, draft grandfather terms, and revenue plan. Calculate what the clause costs by year. Flag conflicts with the revenue plan, protections with no end date, and loopholes such as seat additions at old prices. Identify groups likely to see the policy as unfair. Suggest qualifying groups, a step-up schedule, and an exceptions rule. Stop there so we can answer in writing, then review our answers.
How Pingpong runs the review
The web review app sends your request through several models in order. Each later model receives the original request and every earlier answer, with instructions to assess the work so far. For the steps inside the app, see running your first review.
What a model can't review
A model cannot tell how a particular customer will react to a letter about their price. Pingpong checks whether the policy, the numbers, and the plan agree.
When the decision goes to the board, see war-game a decision before the board meeting. More guides live under work decisions before you commit.