How to price your first product
Price on value, not on cost. The three signals that give you a real price range: customer math, the competitor bracket, and the willingness-to-pay phone call. And why the price belongs in your pitch.
TL;DR: Price on value, not cost. Find your range with three signals: the money the customer saves, the price of the alternative they already use, and the numbers people say out loud on a call. Then charge the top of the range. The price is part of the pitch — it says whether you are running a business.
The principle
Value is not a feeling. It is the size of the problem, in dollars, that the customer has today. If your tool saves a hiring manager ten hours a month at fifty dollars an hour, the customer's honest alternative costs five hundred dollars a month in effort. Your price lives somewhere below that number, close to it. Charge closer to the value, not to the effort of your build.
The three signals
1. Customer math. What does the work cost the customer today, by hand: the hours, the errors, the contractors. That number is the floor your price must respect.
2. The bracket. What do the people already pay to solve this? The spreadsheet, the intern, the neighbouring SaaS at forty-nine dollars a user, the agency doing it for a retainer. Your price belongs inside that bracket, at the sensible relative position — usually a small step below the recognised leader, not in the discount bin.
3. The two-answer call. Twenty minutes with five users, each asked twice: "What price is a clear yes?" and "What price is a clear no?" The yes from the excited and the no from the stubborn frame your range. Now take the top of it.
The numbers that anchor
- Standard SaaS anchor: forty to fifty dollars per user monthly, in a bracket that scales annually.
- The annual plan gets the discount and the monthly option gets the trial.
- Free plans work only when the free tier is a full product crippled by limits, not a discount of the paid one.
The exact number matters less than the decision. Software loses by being the cheapest; it wins by being the clear value. The price anchors both.
The price inside the pitch
The price is a founding fact, and it belongs in the pitch. It is the first proof the founder treats the company like a business, and the best filter for the investors and customers who see it. When the number is on the page, the story moves to the proof behind it — the metrics that financial slides will turn into the number, and the update format that reports them to the world.
Frequently asked questions
How much should I charge for my first product?
Price on the value the customer gets, not on what you spent building. The floor is the money or time the customer saves; the ceiling is the cost of what they use today. Charge in the upper part of that range.
Should I underprice because I am new?
No. A low price trains customers to see you as the cheap option, and those customers leave when the price goes up. Charge the honest value from day one and raise the price as the product grows.
What do I do when nobody pays?
Change the offer, not the price. If people love the product and refuse the invoice, the problem is the message, not the number. Treat the pricing conversation as a second sales pitch.
How do I test a price before launch?
With calls, not tests. Ask users two questions: at what price would this be an easy yes, and at what price would it be a hard no. Two answers per user, ten users, and you have a range.