Introduction

A simple formula helps SaaS leaders guess churn in seconds - and Zapier's pricing shift shows how to turn that math into strategy.

What’s the problem it solves?

Many SaaS companies struggle to connect pricing to real customer behavior. They either guess how long users stay or rely on slow internal data. The “Pricing Ratio” offers a quick way to estimate churn, while Zapier's story shows how to evolve pricing to match product value and customer use.

Quick Summary

Zapier recently moved from selling multiple products to one unified platform. They combined Workflows, Tables, Interfaces, and MCP under a single plan, giving users more value without raising prices. Instead of charging for add-ons, Zapier now lets users build full automation systems right away. They tested the change through closed and open betas, learned that users wanted bundled products, and then rolled it out across the platform.

The second half of the article introduces the “Pricing Ratio,” created by Dan Layfield. The formula is simple: Annual Price ÷ Monthly Price. This number shows how many months a company “sells” in a year. A lower ratio often means high churn because users leave early, while a higher ratio suggests long-term retention.

For example, Codecademy learned that users typically stayed for only 4-5 months. They priced their annual plan as six months' worth of payments and saw better retention, higher average order value, and more cash upfront. Ratios between 3-5 suggest short lifecycles (like fitness apps), 6-8 show moderate retention, 9-11 signal strong retention, and 12+ point to long-term or B2B products.

Key Takeaways

• Zapier simplified its pricing to match its identity as an integrated automation platform.
• Customers received more value and easier access without extra charges.
• The Pricing Ratio can quickly show a competitor's churn or help plan your own pricing.
• A ratio near 12 means high loyalty, while 3-5 means users churn fast.
• Consumer apps often have lower ratios than B2B SaaS tools, which serve long-term needs.

What to do

• Check your own ratio: Divide your annual price by your monthly price to see what it says about retention.
• Adjust pricing based on lifecycle: If users stay 3-4 months, price annual plans near 6 months' value to pull cash forward.
• Use ratios for benchmarking: Compare your ratio with others in your industry.
• Test and adapt: Follow Zapier's example - test bundles, gather feedback, and evolve your pricing as your product grows.
• Keep pricing customer-friendly: Increase value before raising prices, and credit existing users fairly when changes happen.

‍