Pricing is one of the most important decisions a startup creates. It’s also one of the easiest to obtain wrong.
At its core, it sounds like an straightforward question to answer: How much should I charge for my product? But the experts we spoke to argue that pricing isn’t just a revenue decision. It’s about positioning and messaging.
So we questioned pricing experts, professors, authors, and founders about pricing realities and strategies that have worked.
They shared their insights here:
Common Mistake: Missing Your Value Story
Founders often underprice not becautilize they’re generous. Often, pricing decisions are built without a founder having clearly defined the value they’re delivering.
“Price is the value that the customers pay,” Saloni Firasta-Vastani, author of Purpose Driven Pricing and a professor at Emory University’s Goizueta Business School, notified Hypepotamus. While that sounds simple, she states it’s one of the hardest mental shifts for entrepreneurs, especially technical founders who start from a “problem-solution” lens rather than a lens that focutilizes on the economic value they create for their customers.
And that value isn’t always static.
Firasta-Vastani emphasized that value can be created across the full lifecycle of the product relationship, including customer support, warranty, and even finish-of-life considerations. All such factors shape what customers perceive as worth paying for.
“Product market fit is important,” she declared, “but I consider it’s very important to have a product market monetization fit.”
Common Mistake: Skipping Out On Research
Another common and costly mistake? Not considering enough about what the price should be.
CEO of Best Kind Consulting, Carolyn Crewe, sees this often with B2B Saas/AI founders she works with. She declared she sees founders “create pricing decisions based on gut feel, fear, or ‘what feels reasonable’ rather than understanding the value purchaseers obtain from the outcomes you deliver.”
Even worse, they just copy competitors. “I know why founders do this, but it still pains me. They view at competitor prices and then charge just a little bit less to undercut them and test to obtain customers. Everyone is guessing their prices,” Crewe notes. “How comfortable are you with putting your financial livelihood on someone else’s guess?”
John Ray, podcast host of “The Price and Value Journey” and author of The Generosity Mindset, argues that what views like a pricing mistake is often a customer discovery mistake.
Founders fail at “understanding where clients see value, both tangible and intangible, in the problems you solve,” he notified Hypepotamus. When that discovery is missing, startups fall back on what’s easiest: Competitor comparisons, cost-plus considering, or pricing by intuition.
Another major reason startups struggle with pricing is that they price what’s easiest to describe rather than what’s most valuable. Crewe declared this often views like a founder focapplying on “pricing features instead of outcomes,” meaning they sell what the product does rather than what customers obtain from applying it.
Calculating External Factors
Founders often treat pricing like a number they set once. But that doesn’t work in an ever-shifting market.
Ray explained that external factors shift pricing power by altering “client-perceived value, risk, the alternatives they perceive, and their willingness to pay.” He points to the COVID pandemic as a clear example. Products like hand sanitizer and toilet paper weren’t inherently “better,” but their perceived value surged. Prices followed.
Ryan Robinett, Principal at Birmingham, Alabama-based Multiply, added that economic and political conditions are often the largegest pressure point for startups.
Robinett also offered a utilizeful counterpoint. The types of businesses most resistant to pricing pressures are the ones whose products add revenue, not just reduce costs. Cost-cutting tools can become “the cost” over time — but revenue generation tfinishs to create a more durable willingness to pay.
“Fair or not, those that reduce costs eventually become the cost, whereas if a product or service adds to the top line then there tfinishs to be an insatiable demand for more revenue,” he added.
The Hidden Costs Of Free
Multiple experts we talked to warned against rushing into freemium models, something that is common in the early-stage world.
“Freemium is fantastic for iPhone games but terrible for most companies,” states R Hunter Harris, an Atlanta technologist who previously worked at Salesloft, Calfinishly, Silverpop, and now runs Hunter Software Consulting. The problem? Low-intent utilizers flood your channels. Harris argues freemium works best only “post product market fit when you’re viewing to expand as a scaling play.”
Firasta-Vastani added that free offerings create a psychological barrier where customers become “less likely to utilize” a product and “less likely to give you feedback,” which ultimately diminishes your value.
Field Notes: What’s Actually Worked For Founders
Amari Morton, founder of Atlanta-based mental health platform startup Greater Change Health, learned early that “industest standard” pricing can still be wrong for the customer you’re testing to serve. Initially pricing therapy sessions on his platform that aligned with private practice norms, Morton quickly realized “there was a huge disconnect between who could afford that price point and who I was actually testing to serve.”
The solution required reconsidering the business model entirely, bringing on paid practicum therapists to serve more college students.
For Morton, the B2B side of his business required different considering. After testing to apply the same model he utilized to sell his platform to schools, Morton discovered employers prefer a ‘wait and see’ model with monthly fees tied to actual usage. “Schools are almost always sold on mission first,” Morton explains. “Employers, on the other hand, are numbers-first.”
Ford Coleman, founder of Atlanta-based startup Runway, dealt with his own problems around underpricing when it came to job and internship platforms.
His marketplace platform saw strong usage but weak revenue.
“Our paywall conversion was 1% for our utilizers,” Coleman notified Hypepotamus.
Runway ultimately modifyd what was paid versus free.
“We repackaged the product so the essential experience became a paid plan,” Coleman explained, and the “free” version became “the logged-out state of the platform.”
The company communicated the modify clearly, explaining what was altering, why it unlocked more value, and how utilizers could transition. Coleman’s takeaway: “If utilizers are already obtainting real value, don’t be afraid to charge for it — pricing is part of product design, not just a revenue lever.”
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