In April of 2021, Hootsuite announced a pricing increase that would impact all customers, both new and existing.
The service, which previously cost $130 per year, is now priced at $640 per year (both prices including added taxes).
Hootsuite sent the following email at the end of April 2021:
Hootsuite announced a 5X price hike with the only rationale being that the new price “better reflect[s] current market pricing.” Basically, they decided to charge more because they could.
Current clients had the opportunity to stick with their current pricing IF they emailed Hootsuite and moved their renewal date to May 1 (5 days after the email was sent).
I was able to renew at my current rate and turn this into 2022’s problem.
Fast forward to 2022 and I received a charge on my card for $638.57. I received no warning of the renewal besides from the email I received the prior year. I didn’t even get an email receipt. It wasn’t until I saw the charge on my credit card that I noticed that price hike.
My invoices that used to look like this:
Now look like this:
To add insult to injury, I’ve been a paying Hootsuite customer since 2015.
So, what is the takeaway, and what is the point of this post (besides venting the obvious frustration)?
I was a big fan of Hootsuite before this. I’ve been using the service for nearly seven years and I even wrote a positive Hootsuite review.
That said, I don’t take well to pricing increases for current customers. I’ve previously written about UpWork’s pricing increases and Instapage’s pricing increases, both of which are nothing short of pure greed.
I will be canceling my Hootsuite account (more on this later). For now, let’s consider some key takeaways so we, as marketers, can do better and choose to work with better companies.
To Be Fair to Hootsuite…
Before I dive too deep into why pricing increases are bad business, I want to preface this by mentioning two points worth considering.
#1 – Hootsuite’s Support Was Helpful
In fairness to Hootsuite, I had a positive experience with the support agent when I reached out about the increased charge. I got a prompt response from a friendly agent. I tried to negotiate a fair renewal rate since I was open to an increase, but not a 5X increase.
The negotiations failed, but the support agent helped me get a refund.
A support team’s ability to resolve issues is only as good as the management that dictates company policy. If management positions a price increase as non-negotiable, there’s nothing a support agent can do to satisfy customers.
#2 – Pricing Increases are Okay
In the context of this post, when I refer to “pricing increases”, I am referring to drastic price increases for existing customers.
There’s nothing wrong with gradual pricing increases. They are part of business – no objection there.
If Hootsuite increased by annual bill from $130 to $150, I wouldn’t bat an eye. Even at $200, I’d grin and bear it.
Additionally, if Hootsuite increased pricing for new customers whilst offering legacy customers grandfathered rates, I wouldn’t have an issue. New customers can shop around and determine if the offerings justify the pricing. They have no investment into the platform yet.
The point of this post is that a 500% price increase for existing customers is unacceptable.
Why Hootsuite’s Pricing Increase is Bad Business
Drastic pricing increases may increase short-term revenue, but they are a bad business practice in the long run (especially for Hootsuite). Here’s why.
A Big Middle Finger to Legacy Customers
If you are fortunate enough to build a successful company, you are not succeeding alone. You are doing it with the help of your early customers – the customers who took a chance on your company before it was a household name.
You don’t get to be a multi-million dollar company without first reaching the $1,000/month and $10,000/month milestones. Your early customers are the ones that get you there.
When I first started working with Hootsuite, they were a much smaller company. Here’s a look at their organic traffic from SEMRush (I signed up in 2015):
Here is the company’s pricing page at that time:
At this time, Hootsuite had no choice but to treat customers fairly. Fair pricing is quintessential to growth.
Since 2015 when I initially signed up, the service features remained about the same. The main difference is you pay more and get less.
Hootsuite is now big enough not to care about losing a few legacy clients. They are a big operation, with over 1,000 employees and ~$300 million in funding. That said, just because your company can afford to piss off legacy customers, doesn’t mean you should.
There’s a reason why most successful brands “grandfather” legacy customers into more favorable pricing. It’s the right thing to do, it keeps your most loyal customers happy, and It’s just good business.
Pricing increases also say a lot about a company’s management team and how they plan to run the company moving forward.
As a professional online marketer, I’m in this for the long haul. I’m not looking for tools that will get me by for the next year. I’m looking for tools that I can use throughout my career. I don’t want to switch tools unless given a reason. It’s far too time-consuming.
When a company forces a pricing increase on current customers, it’s indicative of how the company will treat those customers moving forward. Let’s assume Hootsuite’s 5X pricing increase was tolerable (even though it’s not). Can I really trust the company not to pull these shenanigans again a year from now?
Not a chance I’m willing to take…
Business is a two-way relationship. Treat your customers well and they’ll stick with you. Don’t and they’ll bail.
Reputation is Viral
I assume most companies run the numbers before instituting a pricing increase. I imagine it looks something like this:
“If we 5X our pricing, we may lose 20% of legacy clients, but we will still generate more revenue overall.”
Looks good on paper, but it neglects a key component of running a successful business – reputation.
Reputation is viral.
A happy customer can be parlayed into 10 new customers. Happy customers share their positive experiences and attract new customers.
An unhappy customer is what I call an “anti-customer.” This type of ex-customer doesn’t just stop doing business with a company – they want others to do the same. They share their negative experience which deters other customers from using the service.
If you asked me for a recommendation for a social media scheduling tool two years ago, I would happily recommend Hootsuite.
If you asked me now, I’d recommend choosing another service.
Don’t take my word for it. Hootsuite has a 1.8 star rating on Trustpilot, with 77% of the reviews rating the company as 1-star.
Here are some quotes from the reviews of customers who share a similar frustration as me:
“I was told my rate would never increase as a Legacy Pro member. You raised my rate over 1100% with no warning.”Trustpilot Review
“Just going to echo the same complaint as most others recently. An astonomical price increase (390%) after being on a legacy plan.”Trustpilot Review
“As a company we have used Hootsuite for a few years now. It does all we want it to do, but they get a 1 star from me purely for the 250% price increase since I last subscribed. There’s no way they can justify this increase…”Trustpilot Review
The sad part is that all of these reviews come from LEGACY customers. These are the customers who have been using the platform the longest. Hootsuite spat in the face of its best customers. And for what? To make a few extra bucks?
For a service that likely has very few variable costs, you’d think the strategic approach would be to keep loyal customers loyal by grandfathering their rates. If not automatically, at least when they contact support (which I tried to no avail).
New Features Are a Given in SAAS (Not a Justification for Price Increases)
Whenever a company increases pricing, the most common rationale is that they added new features and expanded the service offerings.
Hootsuite was brazen enough to claim they just want to “to better reflect current market pricing,” however when I spoke to their customer service team, I got the “new features” pitch.
Before discussing the new features that I don’t even use, let’s get something straight. New features are a given in the world of SAAS.
When a SAAS company builds and improves its software, they aren’t going above and beyond. It’s the name of the game.
I’ve been using dozens of software tools for the past decade, and the majority of them have evolved with the times. A good SAAS tool is one that provides a competitive offering at the time. As times change, the tools evolve and it is expected that good SAAS companies will as well.
A great social media scheduling tool in 2015 looked a lot different than a great social media scheduling tool in 2022.
Software development is an ongoing process. This is why most software has a recurring subscription fee instead of a one-off payment.
Furthermore, just because a company expands its offerings doesn’t mean its customers are getting more value out of the service. In the case of Hootsuite, they added new features that I couldn’t even name. I use the tool for social media scheduling – that’s it.
If a SAAS company wants to bill for new features, the features should be billed as add-ons, not core offerings that impact the base subscription fees.
Your Business Isn’t All That Unique
When I started using Hootsuite in 2015, it was one of a few social media scheduling tools.
These tools are so ubiquitous and easy to develop that many companies have started to include them as free add-ons. Both SEMRush and Mailchimp now have social media scheduling tools, even though that functionality isn’t core to their offerings.
As a response to an increasingly competitive landscape, Hootsuite decided to increase prices and push customers away. Where ever will we go? Let’s just say we have options…
Moving Away From Hootsuite
I’m not paying a 5X price increase for the reasons discussed above. The pricing increase is unwarranted and I can’t trust Hootsuite to treat customers fairly in the future.
I already have an active SEMRush and Mailchimp account with social scheduling features I don’t use. I also have a MeetEdgar account (which I highly recommend).
I will be using Buffer to replace the functionality I relied on Hootsuite for in the past. Buffer offers a free tier as well as fair pricing for growth. Fingers crossed that they don’t pull a Hootsuite in the future.