Retire a legacy product III: accounts and contracts

6 min readMar 9, 2024

For the second time, my VPN provider has cancelled the product packages I subscribed for, and replaced with alternatives at a premium.

The first time, my bank declined a payment transaction due to a technical error, which gave the VPN company a long waited opportunity to terminate my contract. To resume, I had to purchase a new package, cuz the old option had cleverly vanished.
The second time, the VPN company reshuffled all product offerings in order to “give customers their best”. Therefore, my package was to be automatically modified.

That’s the B2C game — controlled price hike for individual customers. More will stomach it than unsubscribing. More money will come out of the price increase than the loss in subscription. In the worst case, you get a bad app store rating. Life goes on.

Whereas in B2B, enraging one big account is enough to send a shock wave to your bottom line and reputation. So be extremely careful when handling accounts and contracts when retiring a product.

This is the third post of a series where I’ll discuss 4 bits and pieces of retiring a legacy product:

Since Q4 2023, I’ve been drafting and pushing forward a plan to sunset an ancient legacy solution from our product suite — a 16-year-old B2B software. There are hundreds of B2B customers using it; half of our organisation knows the solution like the back of their hands; the replacement solution is the stepson whom most don’t look straight in the eyes. Never said it was easy, but it’s going forward.

Enterprise SaaS contracts

Product pricing is science. I won’t cover the entire principle, rather just enough to cover the most relevant and common types of enterprise contracts in this context.

Warning: If any PLG (Product Led Growth) people are reading, you are about to see some ancient models. This is 2024, the majority of SaaS are not PLG yet.

Subscription-based

There’s no surprise. Pay per seat and you can use it all. For example,

An online training platform: Your employees can participate in all the courses for €19 per month per person.

This model offers simplicity for both sales and customers. But to scale the business, there could be more layers of subscription added on top:

The online training platform now offers live courses by renown professors from Oxbridge. For that, you pay an additional €5 for the live courses, or a package of €23 for both live and on-demand courses.

It works well when the customer value is already achieved by having this subscription, e.g. be more competitive in talents acquisition if we offer on job training.

Factor-based

Factor: usage, volume, speed, transaction, task completion, etc. Elements that link your product to the customer’s success criteria. In the industry, it’s probably just called usage- or value-based. In our example, it could be:

The pricing for the online training platform is based on pay-per-course-completion. Instead of charging per seat, you only pay when a course has been completed.

Variations of such model include credits, where an amount is first credited and then deducted each time a course is completed; tiered, where the total number of completed courses is categorised into tiers, each tier a different price.

It wouldn’t be incredibly wise for the online training platform to introduce such a pricing model, since completing a training depends on circumstances that aren’t in control of the platform. Although this would be completely safe for the customer.

Factor-based pricing requires the product to demonstrate actual value for the customer. On a scale of “just trying” to “value created”, the later the user journey, the better it is for the customer, and the riskier for the business.

Good news. Businesses can price at the first point where the value is created, in order to mitigate the risk and keep upselling potential. This requires the business to have a solid understanding of the customers.

Contract handling

For a legacy product, it’s highly likely that customers have been using it for a long while, purchased numerous of additional features and services. Their contracts are not merely simple subscriptions or based on a couple of factors. Some customers likely have unique contracts too. In a sales-driven organisation, it’s hardly the Product Manager who’s going to review deals and negotiate. However, understanding our product’s usage and value, we are responsible for clarifying the relationship between the product and key pricing points.

If the contracts are factor-based (usage, volume, speed, etc):

Can the alternative product perform all the tasks the customer needs, compared to the legacy product? If not, how critical. If something on the roadmap, when.
Does the alternative product cause any delay in value creation? e.g. a more complex setup process.
Does it now require less data storage? e.g. data clean-up is covered in migration.
For the most heavily used features, how does the alternative perform better than the legacy? e.g. a more flexible KPI dashboard.
To complete the same task, why is the alternative faster than legacy? e.g. a better workflow engine.

All your customer interviews and quantitative analysis will help you greatly in this step. You’ll likely already have all the answers. Even if some answers pose a threat to the current contracts, it might not be entirely negative, e.g. helping customers remove duplicate data copies that save their storage space. Work with your Sales team to develop new pricing structures based on the new product functionalities.

If the contracts are subscription-based:

Is there a reason that the customers will buy fewer seats? If so, you may actually have a terrible product strategy that cannibalises your business. It’s not too late to pivot.
Is there additional ACV contribution? The answer should be yes most of the time.

If there are additional services booked, e.g. non-ACV, custom solutions, check if they can be replaced too.

If the contracts are a mixture of subscription and usage:

Which one drives the revenue? There should be a dominant model in the contract, either seat or usage. Prioritise that one first. From a product perspective, ensure that the alternative doesn’t create a conflict between the two.

A few words on contract duration

Your legal will warn you the implications if customers rejecting the new solution. Depending on the contract duration, your likely options are:

For contracts that don’t specify a strict duration but auto-renew at the end of the year, collaborate with your sales team to aim for signing new contracts.
For contracts with a few definite years remaining, find a balance between honouring the customers’ existing deals and transitioning them into a new structure.

Working with stakeholders

Stakeholders: Legal, Sales, Service and Consulting, etc. As Product Managers, we won’t directly negotiate with most customers, except for mega accounts. The best we can do is to support our stakeholders.

Stakeholders may not outright say no to you, or state exactly what they need either, as they might not know yet. Respect this period where everyone is doing their best to work things out.
Trust them when they say, every account is unique, different, and important. For each customer who pays dearly for a product for easily a decade or two, the internal technical struggle or innovation hurdles have no meaning for them. Attend calls with a few key accounts, show your understanding, and if necessary, commit to a feature that benefits them. It won’t hurt as long as you’re not stacking heinous technical debt.
Behind each forceful stakeholder, there is a giant customer who doesn’t budge up. It’s more helpful to dig the customer’s motivation and concern than to react to internal aggression.
If you’re already at this stage, it means the organisation has given you a chance to push through. Maintain your faith in the vision and the new product. If you waver, the stakeholders will hesitate too.

That’s a quick rundown from pricing to contract to collaboration. If you’re interested in an in-depth discussion of any of the points, I’d be happy to hear from you.

Lastly, a shout-out to all Product Managers who have successfully eliminated legacy products or are in the journey to do so.