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Breaking into GTM

I have no idea what to charge. How do I pick a first price?

Find the right order of magnitude first and stop arguing about the exact number. Are you a ten dollar product, a hundred dollar product, a thousand dollar product or a hundred thousand dollar product? That decision follows from who buys, what budget it comes out of, and what they do today instead. Bound it from below by what it costs you to serve a customer and from above by what a heavy user is worth. Most early founders underprice badly, so if nobody has flinched at your price you are almost certainly too cheap. Announce pricing as late as you sensibly can, and build the product so pricing can change without an engineering project.

Go deeper

4 resources, 1 India-specific, 4 link-checked.

✍️ Essay
✓ Link checked Free Beginner

The bounding method for a first price (cost to serve as the floor, cost of a heavy power user as the ceiling) plus the advice to keep pricing changeable in the product. Written for founders who are about to underprice, which is most of them.

The Price Is Right: And for Early-Stage SaaS Companies, It Needs to Be

From Andreessen Horowitz by Steven Sinofsky long read

  • Founders underprice by pricing against thousands saved when the product actually saves hundreds of thousands.
  • In enterprise direct sales, 50 percent or more off list is not unusual and is often required.
  • The SaaS norm is a 3 by N matrix: three plans across N attributes, which can imply dozens of real price points.
  • Wait until the last possible moment to publish price, because post-launch price changes are never read as good news.
Open a16z.com →
📰 Newsletter
✓ Link checked Freemium Beginner

Campbell ran pricing research at ProfitWell across thousands of companies, and his sequence (value metric, then segments, then experiments) is the one to follow. The line worth memorising: get the value metric right and you can get a lot of the rest wrong.

Pricing your SaaS product

From Lenny's Newsletter by Patrick Campbell with Lenny Rachitsky long read

  • Companies priced on a value metric grow at double the rate with half the churn and 2x expansion revenue.
  • Do not discount past 20 percent: bigger discounts convert but correlate strongly with churn.
  • Revenue per customer is about 30 percent higher just from showing the buyer's own currency symbol.
  • Case studies lift willingness to pay 10 to 15 percent; freemium usually works best 2 to 3 years in, not at launch.
Open lennysnewsletter.com →
📄 Article
✓ Link checked India Free Intermediate

Gives you a way to actually pick a value metric rather than just being told to have one: plot activities by frequency and importance, then monetise the medium-medium ones and subsidise the high frequency ones. Worked through with CleverTap as the example.

Value Metrics and Pricing Design for SaaS Companies

From Accel India Insights (SeedToScale) by Dr. Ajay Sethi long read

  • Pick the value metric by plotting each customer activity on frequency against importance.
  • The sweet spot to charge on is medium frequency, medium importance, not the highest frequency action.
  • Do not price the highest frequency activity heavily: subsidize it so a competitor cannot undercut you there.
  • Strong SaaS businesses pull more than 20 percent of revenue expansion out of the existing base.
Open medium.com →

Browse all 796 resources →

The same ground, at another level

How pricing and packaging reads from a different seat.

How do I design tiers so buyers pick the right plan and grow into the next one? Good, better, best works for about two thirds of SaaS companies because it makes the choice easy, so start there unless you have a strong reason no... Doing the work 4 resources → Should I price in rupees for India and dollars for everyone else? If you sell to Indian SMEs, price in rupees, include GST in the displayed number, and support UPI and domestic cards, because dollar pricing on a c... Leading a GTM team 4 resources → How do the best companies raise prices without losing customers? They change price alongside a visible change in value, they tell people early, and they stage it. Grandfather existing customers for a defined peri... How the best do it 5 resources →

People also ask

What is a value metric and why does everyone say it matters more than the number? 4 → How do I design tiers so buyers pick the right plan and grow into the next one? 4 → How do I find out what customers will actually pay without just asking them? 4 → Should I price in rupees for India and dollars for everyone else? 4 → Buyers always ask for a discount. How much do I give, and how do I stop it eating my ARR? 5 → How do the best companies raise prices without losing customers? 5 →

Also in Starting Up

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What business model should I choose for my startup? 3 → How do I decide how much to charge for my product? 3 →

Also in D2C

The same ground, over in Money, pricing & unit economics, our D2C track.

I'm not a finance person, what books/records do I actually need to keep from day one? 3 → What is cohort analysis, and why does it matter more than a single repeat-rate number? 3 →
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