| Related advice given by Marc Andressen: What do you recommend for pricing in SaaS before reaching product market fit? Pricing is highly specific to the product and the market, so it is hard to give general advice. But if I were to give general advice, I’d say that we see far more SAAS startups underpricing their product than overpricing. The problem with overpricing seems obvious—we in our daily lives as consumers are more likely to buy products if they are cheaper, and so pricing higher is presumed to reduce sales. But that’s not how business markets tend to work—in business markets, where customers make what’s called a considered purchase, the result of a reasonably objective and rigorous analysis of options, startups that underprice tend to have the problem I call “too hungry to eat”—by pricing too low, they can’t generate enough revenue per deal to justify the sales and marketing investment required to get the deal at all. In contrast, by pricing higher, the startup can afford to invest in a serious sales and marketing effort that will tend to win a lot more details than a competitor selling a cut-rate product on a shoestring go-to-market budget. TLDR: When in doubt, double prices. :-) |