Dear SaaStr: Should I Overcharge or Undercharge My First Customers?

Dear SaaStr: Should I Overcharge or Undercharge My First Customers?

“Overcharge” if the customer is big, i.e., >$50k-$100k a year or so in deal size.  At least, charge more than your gut likely tells you to.

Undercharge if the customer is small by revenue.  Charge less than you want to, and probably, a smidge less than the more low-end competition, or at least not more.

Why?

To learn.

You’re learning very quickly here if you are enterprise or mass-market. If you are going to do fewer big deals, or tons of small deals.

If your product and business is a volume game, get the volume going. Charge a super cheap price early to take friction out of sales, and to get to 100, 200, 500+ customers fast.

But if you’re going truly enterprise and BigCo early. Don’t sell too cheap. Here, you’re selling a solution to a big problem. Not just a tool or a cheap fix. Here, you need to understand how much value you can provide. So go in high. And overdeliver when you win in. This will drag you upmarket, and you’ll learn. Which is key. You want to learn as quickly as possible.

Now I don’t mean literally overcharge if you want to go more enterprise.  But I do mean charge more than you might think.  Push yourself to ask for more, if you think bigger customers are your path forward.

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Published on January 1, 2023

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