Best Practices for Handling Plan Upgrades and Downgrades

Plan change playbook Effectively managing plan changes is key to customer satisfaction and sustainable growth for your software product.

A plan change workflow is the series of steps a customer takes to upgrade or downgrade their subscription plan within your product. This process is a critical touchpoint in the customer journey, directly impacting user satisfaction, retention, and revenue.

A well-designed workflow makes it easy and transparent for users to adjust their subscription to better fit their needs. A poorly designed one, however, can lead to frustration, churn, and a negative perception of your brand.

Investing in a smooth plan change process is about more than just good housekeeping; it’s a strategic pillar for sustainable growth. It shows respect for your customers’ autonomy and builds trust, which is the bedrock of long-term loyalty.

Here’s why it’s so important:

• Reduces customer churn. A difficult downgrade process can feel like a trap, souring the relationship and ensuring the customer never returns. By making it easy for users to pause or scale back, you leave the door open for them to upgrade again when their needs change.
• Increases lifetime value. A seamless upgrade path allows customers to grow with you. As their needs evolve, they can easily access more features and capacity, increasing their investment in your product over time.
• Provides valuable feedback. The moment a customer decides to upgrade or downgrade is a rich source of insight. Why are they changing their plan? What features are they looking for? This feedback is a goldmine for product development and marketing.
• Strengthens brand trust. A transparent, fair, and easy-to-navigate process for handling money and account changes shows that you respect your customers. This builds trust and goodwill, turning users into advocates.

Building a great plan change experience comes down to clarity, fairness, and putting the user in control. Think of it less as a transaction and more as a conversation with your customer.

Here are the key components to consider:

1. Make the options clear and easy to find Your plan management area should be intuitive and accessible, typically within the user’s account or billing settings.

• Use a clean, visual layout to compare plans side-by-side.
• Clearly highlight the key differences in features, limits, and pricing.
• Use a toggle for monthly and annual pricing to show users the savings.

2. Be transparent about billing changes No one likes surprises on their invoice. The most critical part of any plan change is communicating exactly how it will affect the user’s bill. This is where proration comes in.

Proration is the practice of charging or crediting a user for the portion of the billing cycle they used a particular plan.

• Upgrades: When a user upgrades, you typically charge them immediately for the prorated difference between their old and new plan for the remainder of the current billing cycle. Their next bill will reflect the new, full price.
• Downgrades: When a user downgrades, it’s best practice to apply a prorated credit to their account. This credit can then be used against future invoices. This feels much fairer than making them wait until the next cycle to see the financial benefit.

Whatever you decide, show the math. Display a clear summary of the changes before the user confirms, including any immediate charges or credits.

3. Define when changes take effect Decide on a consistent policy for when plan adjustments become active.

• Upgrades: It’s best to apply upgrades immediately. The user is excited to use new features, so don’t make them wait.
• Downgrades: You have two main options:
  • Immediate: The user loses access to premium features right away. This is simpler to implement but can feel punitive.
  • End of cycle: The user retains access to their current plan’s features until the end of the billing period. This is the most common and customer-friendly approach.

4. Handle data and feature access gracefully When a user downgrades, what happens to the data they created with features they no longer have access to?

• Never delete user data without warning. Clearly communicate your data retention policy.
• A good practice is to disable access but preserve the data for a period (e.g., 30-90 days). This allows the user to re-upgrade and regain access without losing their work.
• For features that are now disabled, use clear UI cues to explain why they are no longer accessible and offer a path back to the plan that includes them.

Encouraging upgrades is all about showing value at the right moment.

• Use contextual prompts. Nudge users to upgrade when they hit a usage limit or try to access a premium feature. For example, if a user on a “Basic” plan tries to add a fifth team member when their limit is four, prompt them with a clear message: “Looks like you’re growing! Upgrade to the Pro plan to add unlimited team members.”
• Focus on the benefits, not just the features. Instead of saying “Upgrade to get webhooks,” say “Upgrade to automate your workflows and save time.”
• Make it a one-click affair. The upgrade process should be as frictionless as possible. Once a user decides to upgrade, the confirmation and payment should be seamless.

A downgrade isn’t a failure; it’s a natural part of the customer lifecycle. Handle it with empathy and strategic thinking.

• Don’t hide the downgrade button. Making it hard to downgrade creates resentment. A user who feels trapped is unlikely to ever return or recommend your product.
• Offer alternatives. Before confirming the downgrade, you could offer to pause the subscription for a few months or suggest a more suitable, lower-cost plan if one exists.
• Ask for feedback (but don’t force it). Use a simple, optional one-question survey to ask why they are downgrading. “What’s the main reason you’re changing your plan today?” with a few multiple-choice answers is often enough.
• Confirm the change clearly. Send a confirmation email summarizing what has happened, what they’ve lost access to, and when the change takes effect financially. This reinforces transparency and trust.

Effectively managing plan changes requires a solid foundation for billing and user management. Kinde is designed to handle this complexity for you, so you can focus on building your product.

Kinde’s billing engine automates the entire plan change workflow, from proration calculations to invoicing. You can easily define your plans, and Kinde handles the rest, ensuring your customers have a seamless and transparent experience whether they’re upgrading or downgrading.

• Subscribed to a plan
• Update subscriber plan
• Cancel a subscription