When sales slow, software firms squeeze loyal customers. It backfires.

When sales of a software product slow down, some companies start squeezing the customers they already have. SaaStr, a site for software business leaders, says that is a mistake. It also says the mistake is costlier now because customers can switch more easily.

What the squeeze looks like

SaaStr says the conversation changes when growth slows, especially from the chief revenue officer, the executive in charge of sales. Price increases come up a lot. So do forced multi-year deals and new fees or usage-based metering. None of it adds a new customer. It only takes more from current ones.

It can work for a while. A measure called net revenue retention, which tracks revenue from existing customers, can look fine for a few quarters. But SaaStr says the company is spending down goodwill, and that loss does not show up in a board report until it is gone.

Why it is riskier now

SaaStr says switching costs are falling fast. Customers weigh AI-built alternatives every quarter. Some build replacements themselves with AI agents and a so-called vibe coding tool, which writes software from plain instructions.

SaaStr says it does this too. When a vendor springs a price increase, a forced multi-year term or a new metering scheme, it checks what leaving would take. More and more often, it says, the answer is "not that much."

What is not known

The piece is an opinion from a company that follows the software industry. It gives no figures on how many customers have actually left a vendor over price changes.