Upselling
Encouraging a customer to buy a more expensive version, plan or add-on of what they are already buying, such as a larger size, a premium tier or an extended warranty. It raises revenue per customer without the cost of acquiring a new one. It works when the upgrade solves a problem the customer already has; pushed at the wrong moment, it adds friction and can cost the original sale.
Where it's used
Used in e-commerce checkouts, SaaS pricing and account management, hospitality and retail sales. Good when the higher tier has a clear extra benefit and the customer has already shown they value the basic one.
How to calculate it
Upsell revenue = customers upgraded × (higher price - current price)
Worked example
Illustrative numbersA SaaS tool has 1,000 customers on its $20 per month plan. An in-app prompt, shown when a team hits its user limit, moves 8% of them to the $35 plan.
Upgrades
1,000 customers × 8% = 80
Extra monthly revenue
80 upgrades × ($35 - $20) = $1,200
Lift on plan revenue
$1,200 ÷ (1,000 customers × $20) = 6%
What it tells you
A 6% revenue lift with no new customers, triggered at the moment the limit became a real problem.