Pricing Your Product

How to pick the right price and stop leaving money on the table.

The Value Equation

The single most important pricing concept. Sit down with your champion and write down, step by step, exactly what value your product delivers. Value = cost savings, time savings, or revenue increases.

Example: AI Customer Service Tool

Company has 100 support agents at $100K each = $10M cost. Your tool eliminates 20% of queries = $2M savings. Charge 25–50% of value = $500K–$700K. Customer keeps $1.3M, you keep $700K. ROI story: spend $700K, save $1.3M.

The 3-Tier Framework

Starter

Entry point. Limited features. The anchor that makes Pro look like a bargain.

Pro (Main Product)

Full features. 70–80% of customers should land here. Price at 3–4x Starter.

Enterprise

SSO, SOC 2, compliance. Gate these features. Price at 3–5x Pro or "Contact Sales."

Common Pricing Mistakes

Mistake: Pricing too low

Start 50% higher than you think. If every deal closes immediately, you're underpricing.

Mistake: Competing on price

This is a race to the bottom. Differentiate on value, not price.

Mistake: Never raising prices

Re-evaluate every 6–9 months. Test 5–10% annual increases on new customers.

Mistake: Overcomplicating pricing

Too many tiers, too many variables. Simple pricing closes deals.

The Blomfield Method

Start at a number that makes you uncomfortable. Raise by 50% each new pitch. When you start losing >25% of deals purely on price, you're in the right range. You don't need to win every single deal.

Next: Retention & Metrics →