Startup Pricing 101

This talk focuses on startup pricing fundamentals, emphasizing why pricing is often confusing yet critical for growth. It covers first principles like the “pricing thermometer” (value, cost, price) and introduces value-based pricing as the ideal approach. Startups often underprice due to poor understanding of their value or costs, targeting the wrong customer segments. Pricing affects acquisition strategy, margins, and sustainability—especially dangerous in the SMB “struggle zone.” Effective pricing considers customer type (early adopters vs. mainstream) and product complexity. Optimize pricing by testing tiers, tracking conversion rates, and using the 10-5-20 rule: price should be 1/10th of value, raise prices by 5% until you lose 20% of deals. Ultimately, pricing offers the highest ROI for startups and is often the most underutilized growth lever.
Source: Y Combinator