Your pricing is not good: how to stop leaving money on the table

Startups love to talk about growth hacks, go-to-market strategies, and user acquisition. But when it comes to pricing? Total silence, or worse, copy-pasting competitors’ numbers and calling it a day.

Here’s the hard truth: your pricing strategy is probably broken. Not because you’re bad at math, but because you’re playing defense instead of offense. Most early-stage companies either undercharge out of fear or throw together overly complex pricing models that confuse more than they convert.

Great pricing isn’t about just covering costs. It’s about capturing value, positioning your product, and maximizing revenue without burning out your team or cheapening your brand.

Let’s kill the myth that “lower price = better strategy.” Founders often look at competitors, pick the bottom of the range, and think they’re being clever. But someone will always be cheaper. If price is your only differentiator, you’re not building a business, you’re entering a race to the bottom. Research shows that consumers associate low prices with good deals and low quality. Which perception dominates? It depends on your positioning. A cheap product with no story feels risky. A premium product, priced with confidence, feels like a smart choice.

In fact, pricing can create perceived value. A French champagne brand couldn’t sell in the U.S. until they doubled the price. Sales exploded. Why? Because price signals quality, especially in high-touch or luxury markets. If you’re offering premium value, pricing too low undermines your credibility. Plus, low pricing burns your runway. You may sell more, but margins shrink, support costs balloon, and you need 10x the volume just to survive. That’s not lean, that’s exhausting.
Before you slap on a discount, ask yourself: Is this strategic or just scared? If your product delivers real value, price it like it. Your confidence sets the tone.

Pricing is part science, part psychology, and part poker face. It tells the world what you think you’re worth. These seven strategies work, if you use them intentionally:

1. Value-based pricing: sell the outcome, not the hours
This one is the holy grail for a reason. Instead of basing price on cost or competitors, you price based on how much value you deliver to your customer. Think less “how much did it cost us to build?” and more “how much is this solving worth to them?”
If your product saves a company $100K/year, charging $500/month isn’t bold, it’s generous. But this only works if you deeply understand your customers’ pain points, goals, and what success looks like for them. That means interviews, surveys, usage data, whatever it takes.
And yes, you need the guts to charge accordingly. Value-based pricing without confidence just becomes a discounted guess.

2. Premium pricing: because expensive feels better
Price communicates value – sometimes louder than your landing page ever could. If you want to position your product as best-in-class, don’t be shy about pricing like it. People associate higher cost with higher quality, especially in B2B or luxury markets.
But beware: this only works if the product, experience, and brand back it up. Premium pricing with budget branding is like showing up to a black-tie event in gym shorts. If you’re charging a premium, your design, UX, onboarding, and messaging need to feel just as premium.

3. Penetration pricing: the Trojan Horse play
This is the “get in, then grow” move. You come in cheaper than competitors to win trust and adoption quickly. It works well in commoditized or crowded markets, or when you’re an underdog trying to build momentum.
The catch? Have a plan to raise prices. And communicate it early. If you train customers to love you for being cheap, they’ll hate you for changing-even if your product keeps improving.
Pro tip: use this tactic with early access users, beta testers, or limited-time promos so it feels like a temporary advantage, not your brand’s identity.

4. Price skimming: let early adopters pay the R&D bill
You launch at a high price to maximize early returns, then drop it as you scale. Ideal for new, innovative, or exclusive products, especially when early users are less price-sensitive and more status-driven.
Think iPhones, electric cars, or software that solves a pain point right now. The key is to be deliberate with your timing. Drop the price too soon, and you alienate your superfans. Too late, and you miss the mass market. Also, don’t forget to reward your early adopters with perks, not punishment.

5. Freemium/free trial: the gateway drug
You let users in for free, get them hooked, and then charge for deeper value. This model dominates SaaS, mobile apps, and any platform with high engagement and low marginal cost.
But here’s the nuance: the free plan needs to be good enough to create habit, but limited enough to make upgrading a no-brainer. You also need to clearly define the ‘aha moment’ – the point when someone realizes they need the full version.
Common pitfalls: over-delivering in the free tier (no one converts) or under-delivering (no one stays). Finding that balance is more art than science.

6. Tiered pricing: let them choose their own adventure
Three tiers. Three types of customers. Three levels of value. Done right, this is chef’s kiss.
Tiered pricing allows you to serve multiple segments without diluting your offering. It also encourages natural upgrades, once someone outgrows the Starter plan, the pro tier becomes obvious. Enterprise needs more seats? Custom pricing time.
Tips:
Keep it simple: three tiers is usually enough.
Name them smartly: names should imply progression (“Starter” → “Pro” → “Elite”).
Structure for choice architecture: put the middle tier front and center, it’s often the sweet spot for both you and the buyer.

7. Psychological pricing: don’t sleep on the Jedi tricks
Pricing is emotional. So use it to your advantage.
Charm pricing ($9.99 vs $10) works because we read prices left-to-right and process $9.99 as meaningfully cheaper than $10.
Anchoring: show a $299 option next to a $99 plan and suddenly $99 feels like a steal.
Bundling: combine products to create perceived savings without changing core pricing.
Decoy pricing: add a high-priced, rarely chosen tier just to make the middle one more appealing.

Pricing is your growth engine. But too often, startups treat it like a leftover topping, something you slap on at the end of the process. Here’s what to avoid if you don’t want to bleed cash before you even get off the runway:

1. Cost-based pricing: playing defense, not offense
Yes, it’s safe. Yes, your accountant likes it. But cost-based pricing is completely disconnected from the customer’s reality. It assumes that value=effort, which is almost never true.
Fix it: Switch to value-based pricing. Figure out what your solution means to your customer, not what it took you to build.

2. One-size-fits-all: alienating everyone equally
Customers are not one monolith. What your early adopters want is different from what your enterprise buyers care about.
Fix it: Use segmentation. Offer flexible plans, add-ons, or discounts that align with real user behavior, not what’s easiest to manage.

3. Outdated pricing: the set-it-and-forget-it trap
Pricing should evolve with:
Your product
Your market
Your brand
If your product has grown, your price should reflect that. If you’ve improved onboarding, boosted retention, or added killer features, but still charge what you did at launch? You’re undercutting yourself.
Fix it: Do quarterly pricing reviews. Track CAC, LTV, churn, NPS. Stay proactive.

4. Letting sales set the price
Sales teams want to close deals, not defend margin. If they’re customizing prices in every pitch without guardrails, you’re building a leaky revenue funnel.
Fix it: Give sales a sandbox. Provide frameworks, not free-for-alls. Let data drive pricing, then give sales the tools to sell within those limits.

5. Weak value proposition = weak price confidence
If your messaging doesn’t clearly communicate why your product is worth the price, guess what? It won’t feel worth it.
Sales teams discount. Customers hesitate. Churn increases.
Fix it: Nail your positioning. Align pricing with customer outcomes. Make the story so clear and compelling that the price feels like a no-brainer.

Bonus: leading with price instead of value
You’ve got 30 seconds to make an impression, and if you spend it blurting out numbers, you’ve already lost.
Fix it: Frame value first. Uncover the customer’s pain, then show how you solve it. Price should feel like the logical result, not a random guess.