This is a surprising move to me. Seems like they are further deprioritizing trying to win small companies, which might make sense based on their revenue split, but I do wonder if it’s going to hamper them in the long term.
For enterprise users, $20/mo is not going to move the needle. But for a startup, that is actually a material spend, particularly given that Gitlab still don’t support monthly billing on subscriptions like most SaaS services do. (I would not be surprised if they lost a number of cost-conscious customers to GitHub due to the “annual only” pricing model.)
For user acquisition, broadly speaking you can acquire big customers in two ways; either you convince a big company to switch to your product, or you win a small company that then grows into a large one. The latter requires you to have mindshare and GitHub clearly wins on this count.
The risk with just trying to win large companies is that there is significant inertia involved in core tooling like CI/CD; to convince someone to switch off their current system will require a lot of benefit, and the amount of work only increases as the company gets bigger. It’s way easier to convince a startup to use Gitlab from the get-go than to convince someone to convert a 100-1000 person org.
So talking all of this through, I can see why Gitlab doesn’t want to scrap with GitHub over supporting all of the low-margin $5/mo companies, and wants to focus on higher margin enterprise deals. If they are seeing better performance in that segment, then jettisoning the $5/mo plan might let them focus on fewer customer profiles, and make the product more polished there. But it seems potentially risky, going all in on one sales strategy vs. having a diversified approach that gives some hedging.