Renewal Price Increase (Uplift)

What is a renewal price increase?

A renewal price increase (often called an uplift) is the change in what you pay when a subscription term ends and a new one begins. During a term, your price is often locked. At renewal, the contract decides what the vendor may charge next.

It ties directly to the auto-renewal clause. If your contract renews on its own, the uplift applies on its own too, unless you act before the notice of non-renewal deadline.

Uplifts come in three main forms:

• A fixed percentage. The contract names a number, such as 3% or 5% a year. You can predict it, and it compounds over time.
• An inflation-linked increase. The price rises with the Consumer Price Index (CPI), sometimes plus a few extra points. See CPI price increase.
• Current list price. The vendor may charge whatever its published price is at renewal. There is no ceiling unless you negotiated one.

This page is about annual or multi-year contracts that renew. Price changes on monthly or self-serve plans work differently and are covered under price change notice.

What it looks like in a vendor's terms

A typical clause reads like this:

Fees are fixed during the current Subscription Term. Upon renewal, fees may increase to the provider's then-current list price, or, if a renewal rate is stated in the Order Form, by the percentage stated there. The provider will notify you of any increase at least 30 days before the renewal date. If you do not agree to the increase, you may choose not to renew.

• "Fixed during the current Subscription Term" means no mid-term increases. Check the exceptions, such as adding seats or going over your limits.
• "Then-current list price" is the uncapped option. Your discount can disappear at renewal.
• "If a renewal rate is stated in the Order Form" means the order form can override the default. This is where a negotiated cap lives.
• "At least 30 days before" is the warning you get. If your opt-out deadline is also 30 days out, you may have almost no time to react.
• "You may choose not to renew" is your only remedy. The vendor does not need your agreement to raise the price.

Real terms show each style. HubSpot's terms say "we may increase your Subscription Fees up to our then-current list price," with at least 30 days' notice before the renewal. Zendesk's customer agreement says "Zendesk may apply then-current rates" at renewal. Calendly's customer terms allow a renewal increase of the Consumer Price Index plus 3%, unless Calendly gives notice of a different rate before the renewal term starts.

A real change we caught

Venpo flagged a change in Cloudinary's enterprise agreement. As our article Cloudinary added a 3% annual fee increase to its enterprise agreement explains, the agreement now includes a 3% yearly fee increase. A fixed uplift like this is easy to plan for, but it adds up across a multi-year relationship.

Two other changes show how renewal pricing can move in the vendor's favor. Our article Mural's renewals can now go up 5% a year instead of 3% covers a default yearly renewal increase that went from 3% to 5%, which Mural can replace with different pricing on 30 days' notice. And Snyk dropped its 5% renewal cap, so renewals now move to Snyk's then-current rates.

How the cost adds up

A fixed uplift compounds. Each year's increase is applied to the already higher price. For example, here is what a 5% yearly uplift does to a $20,000 subscription:

1. Year 1: you pay $20,000.
2. Year 2: 5% more, so $21,000.
3. Year 3: 5% more again, so $22,050.
4. Year 4: $23,153 (rounded).
5. Year 5: $24,310 (rounded), about 22% above where you started.

A list-price clause can move much faster than that, because nothing limits the jump. A CPI clause depends on inflation, which you cannot predict at signing.

When the increase can apply

The renewal date is the obvious moment, but it is not the only one. Read your contract for each of these:

• At each renewal. The standard case. The new price applies from the first day of the new term.
• On each anniversary of a multi-year deal. A three-year contract can still rise in years two and three if it includes a yearly escalator.
• When a discount ends. A first-year or launch discount may expire at renewal. The jump looks like an uplift even if the list price did not change.
• When you add seats or products. Additions are often priced at then-current rates. Atlassian's Customer Agreement, for example, charges for increased usage at its then-current rates unless your order says otherwise.
• When the pricing model changes. A move from per-seat to usage-based pricing, or to new plan tiers, can raise your cost at renewal without a change to the headline rate. See forced plan migration.

How to respond to an uplift notice

If a renewal quote or price notice arrives, work through it in order:

1. Check the date. Compare the notice date with your opt-out deadline. If the deadline is close, send a notice of non-renewal first to keep your options open.
2. Check the basis. Find the clause that allows the increase and confirm the new price matches it: the stated percentage, the CPI figure or the list price.
3. Check your order form. If it states a cap or a renewal rate, the vendor should follow it, even if the online terms say something else.
4. Check your usage. If you are paying for seats or tiers you do not use, right-size before the renewal rather than after.
5. Ask in writing. Request the old rate, a smaller increase, a cap on future renewals or a longer locked term in exchange for a longer commitment.
6. Get the result into a signed order form, not just an email.

Why it matters to you

• Your budget. If you run on a few dozen tools, small uplifts on each one add up to a real line item every year. Tracking every renewal date on a SaaS renewal calendar shows you the total before it lands.
• Your own pricing. If you sell to customers on fixed multi-year prices, your costs can rise while your revenue stays flat.
• Your discount. A first-year discount often applies to the first term only. Under a list-price clause, renewal can wipe it out.
• Short reaction time. A 30-day price notice and a 30-day opt-out deadline can land on the same day. You may learn the new price only when it is too late to leave.
• Terms move between renewals. As the Mural and Snyk changes show, the limit that applied when you signed may not be the one that applies at renewal, unless it is written into your order form.

What to check

• Which kind of uplift applies: fixed percentage, CPI, then-current rates or list price.
• Whether your order form states a renewal rate or cap, and whether it overrides the online terms.
• How much notice the vendor gives before an increase, and whether it arrives before your opt-out deadline.
• Whether discounts carry over to renewal terms, or end after the first term.
• Whether adding seats or products mid-term is priced at your rate or at list price.
• Whether the vendor can change the uplift rule by updating its online terms before your renewal.

What to negotiate

Your leverage is highest before you sign and in the weeks before your opt-out deadline. These are the asks that make the most difference:

• A written cap on each renewal, covered in detail below.
• Discount carry-over, so the discount you won in year one applies to renewal terms too.
• Earlier notice of any increase, such as 60 to 90 days before your opt-out deadline rather than before the renewal date.
• Price protection for added seats, so new seats cost the same per unit as your existing ones.
• A longer locked term, such as a two or three year deal with no increase, if you are confident you will keep the tool.

Price Escalation Clause

A price escalation clause builds a yearly increase into the contract from the start. Instead of leaving the renewal price open, it states how much the fee goes up each year, so both sides know the number in advance.

The increase is stated in one of two ways:

• A fixed rate. For example, fees rise 3% on each anniversary of the start date. The Cloudinary change in our article is this kind.
• An index. For example, fees rise by the change in CPI, sometimes plus a margin, as in Calendly's CPI plus 3% wording.

Watch when the increase applies. An escalation clause can apply each year of a multi-year term, not only at renewal. That means your price can rise in year two even though you signed a three-year deal. Also check whether the escalator applies to every line item, including add-ons and usage fees, or only the base subscription.

An escalation clause is not always bad for you. A known 3% can be safer than an open list-price renewal, because it gives you a ceiling you can budget for.

Renewal Price Cap

A renewal price cap limits how much the vendor can raise your price at each renewal. It is the main thing to ask for if your contract renews at list price or then-current rates.

How to ask for one:

1. Before signing, or well before your opt-out deadline, ask the vendor to add a cap to the order form.
2. State it as a clear number, such as "renewal fees will not increase by more than 3% over the prior term's fees."
3. Ask that the cap apply to every renewal, not only the first one.
4. Ask that it cover all products and seats on the order form, including ones you add later.
5. Make sure the order form says it wins over the online terms if they conflict. See order of precedence.

A cap in the vendor's online terms is weaker than one in your signed order form. Online terms can change before your renewal, and Snyk's removal of its 5% cap, covered in our article, shows that a published cap can disappear. You can also ask for the lower of a fixed cap or CPI, which protects you when inflation is low.

How Venpo helps

Venpo watches your vendors' terms of service and billing pages and emails you when renewal pricing changes, such as a new uplift, a higher cap or a removed one. The Fine Print Scan also answers, for each vendor, whether it can raise your prices, so you know which renewals to prepare for.