How to Price Your Product When You Have No Idea What to Charge

Most founders price their product by looking at competitors, halving the number because they're scared, and hoping for the best.

This is backwards, and it's leaving serious money on the table.

The Core Principle: Value, Not Cost

Your price should reflect what your product is worth to the customer, not what it costs you to build. These numbers are usually miles apart.

If your tool saves a marketing manager 5 hours a week, and their loaded cost to the company is $60/hour, you're creating $300/week = $15,600/year in value. Charging $49/month ($588/year) means you're capturing less than 4% of the value you create. That's almost certainly too low.

The Three Pricing Questions

Before settling on a number, you need answers to:

1. What is the buyer's alternative? (Hiring a person, using a different tool, doing it manually — what does that cost?)
2. What is the decision-maker's budget authority? (An individual vs. a team vs. a company buys very differently)
3. What is the switching cost? (How painful is it to leave your product after 6 months of use?)

Higher switching costs = higher sustainable pricing.

Price Discovery: Talk to People

The fastest way to find your price is to run "pricing conversations" with 10-15 potential customers.

The Van Westendorp Price Sensitivity Meter is a classic tool: ask four questions:

1. "At what price would this be so cheap you'd question the quality?"
2. "At what price would this be a bargain?"
3. "At what price would this start to feel expensive?"
4. "At what price would this be too expensive to consider?"

Plot the answers and find the "acceptable range." Your sweet spot is usually just above the midpoint.

The Price Anchoring Move

Whatever you decide to charge, show a more expensive option first. A $199/month plan makes $99/month feel reasonable. A $99/month plan makes $99/month feel like what it is.

Price anchoring is not manipulation — it's giving customers context for the value hierarchy.

Common Pricing Mistakes

Charging by feature: Customers don't buy features. They buy outcomes. Price on outcomes when possible ("save 5 hours/week" not "access to our API").

Starting too low and raising later: Counterintuitively, this is harder than starting higher. Early customers become anchors. It's psychologically easier to lower a price than raise one.

Not charging at all for too long: Free users give you feedback. Paying users give you signal. You need the second kind faster than you think.

For B2B SaaS Specifically

Rough heuristics that hold across most B2B tools:

• Under $100/month: self-serve, minimal sales touch
• $100-500/month: light sales (quick demo, 1-2 week close)
• $500-2000/month: needs a sales conversation, often involves procurement
• $2000+/month: enterprise sales, legal review, security questionnaires

Price to the tier that matches your go-to-market motion, not the other way around.

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