Can a company raise the cost of a service partway through a service period?

Question

We've been paying $500/month since we started using this SaaS company several years ago, as one of their first customers. The company sold to some other company in April.

On July 19, of this year they sent us an invoice for June saying it cost $500 (the usual rate, Due Aug 1 and we already paid it) and then mentioned in the same email that in July, the same services would cost $2500+. This came as a complete shock, so we fully moved off of the service by August 3.

Can this company charge us $2500 for July even though they gave us notice of the rate change 2/3 of the way through? We are happy to pay them $500 for July.

Answer 1

A company (or individual) can sell their goods or services for whatever amount they want. If their customer agrees to the amount then both they and the customer are bound by the price for the duration of the contract.

If I offer an ongoing service for $500/month and you accept then I must supply the service and you must pay for the term that we agreed – 12 months, 5 years, whatever. If we did not agree on a term then the implied term is 1 month. (If instead the contract was for $6000 payable monthly then the implied term would be 1 year.)

At the end of the term either the contract will have provisions for what happens or the parties can renew it, either explicitly or implicitly (by continued use). Also at the end of the term either party is free to change the terms, including the price, with the agreement of the other party.

You have been using the service for several years – the original term has almost certainly expired – the price can be changed. However, they cannot change the terms (without your agreement) during a term.