I find it interesting that several companies are enacting policies to extract more revenue from customers in this economy via price increases or policy changes.
I feel that this may force customers who are looking to reduce cost leave respective platforms resulting in a negative impact on the revenue.
Isn’t the best strategy in an economic situation such as this to hold pricing and give one less reason for customers to drop off?
Its difficult to quantify a best strategy as there a many more variables at play than just what the customers can afford. There is usually a "sweet spot" for every type of customer that is a careful balance between price and amount of customers that maximizes profit. I'm doubtful that this price change will motivate more than 34% (1 - $19/$29) of their customer base to move elsewhere that would negate extra profits from price hike. Mostly due to the time required for customers to move elsewhere and the sunk investment of moving onto gitlab in the first place (a form of vendor lock in). There are also likely savings in other areas such as support that roughly scale with number of customers like sverhagen suggested.
From a financial perspective, it seems likely that gitlab will profit from this change. They may be able to profit more and mitigate hobbyist/very small business business loss by introducing another tier but gitlab is the only one that has enough information to determine if that is worthwhile from their perspective.
I'm sure they have spreadsheets and math to back this up, and I'm going to wager that they decided that less customers in a higher tier is beneficial. The smaller customer base is not only made up for by the higher prices, but also the lesser overall customer acquisition costs and the typical lower cost to support this smaller group of customers, lots of whom may have staff of their own to field some of the basic support questions, before hitting up GitLab's support team.
But it _does_ make me sad that there's just no step in-between. I don't need to be a complete free-loader, but you quickly exceed the 5-user limit of the Free plan, after which $12x12=$348 per user/year is a steep jump up, for which I wish (and have pleaded with them) there to be an intermediate option.
And this is when Microsoft swoops in at the executive level and starts offering massive 1/2 year volume discounts including freebees like GitHub. Easy sell... or so I've heard.
I feel that this may force customers who are looking to reduce cost leave respective platforms resulting in a negative impact on the revenue.
Isn’t the best strategy in an economic situation such as this to hold pricing and give one less reason for customers to drop off?
At least that is what I’d do.