I have had the same conversation with dozens of early-stage founders. They have built something real, found a handful of customers who are genuinely excited, and are now trying to figure out what to charge. The number they land on is almost always too low.
Not slightly too low. Significantly too low. Sometimes embarrassingly so. And when I ask them how they got to that number, the answer is usually some version of: I did not want to scare anyone off.
That is not a pricing strategy. That is anxiety dressed up as strategy.
The fear that drives underpricing
Underpricing almost never happens because a founder has done careful market research and concluded that a low price is the right call. It happens because raising the price feels like risking a loss. If you price at twenty dollars a month and someone says yes, that feels safe. If you price at two hundred and they say no, you have to sit with the rejection and wonder if it was the price or the product.
So founders avoid the question entirely. They set a price that feels unlikely to get objected to and move on. The problem is that in doing this, they have made a series of decisions with enormous long-term consequences without actually thinking any of them through.
Underpricing does not just mean less revenue. It changes the entire character of your business.
What undercharging actually costs you
The first cost is the obvious one: you need more customers to hit the same revenue target. If your product is priced at thirty dollars a month, you need a thousand customers to reach thirty thousand in monthly recurring revenue. At three hundred dollars a month, you need a hundred. That difference in scale changes everything about how you build your sales process, your customer success function, and your support load.
The second cost is less obvious but more damaging. Cheap prices attract cheap customers. Not in a value sense, but in a behavioral sense. Customers who bought because the price was low enough that the decision felt almost trivial are the ones most likely to churn the moment something better or cheaper comes along. They have no real attachment to what your product does for them, because the decision to buy it was not meaningful enough to create one.
The third cost is reputational. In almost every B2B category, price signals quality. A prospect comparing you to a competitor will do a fast mental calculation when they see your price is significantly lower. They will wonder what is wrong with it. Whether it is less reliable, less supported, less proven. Being cheap rarely reads as a bargain. It reads as a risk.
Your first customers are not price-sensitive
Here is the counterintuitive thing about early-stage pricing. The customers who buy from you when you have no reputation, no case studies, and no proof points are not buying on price. They are buying because they have a painful problem and they believe you can solve it. These are your most committed, highest-signal customers. They found you, evaluated you with limited information, and still said yes.
That profile of customer is almost never price-sensitive. They are problem-sensitive. The price they are willing to pay is a function of how much your product reduces their pain, not how many features you have relative to the competition.
Think about it this way. If your software saves a business owner five hours a week, and their billable rate is a hundred and fifty dollars an hour, you are creating seven hundred and fifty dollars of value weekly. Charging forty-nine dollars a month for that is not competitive pricing. It is irrational pricing. You could charge four hundred a month and the customer would still be getting a significant return on their spend.
The right way to find your price
The most reliable way to find the right price is to keep raising it until some customers start saying no. Not hypothetically, but in actual conversations. Test a higher price with your next five prospects. If all five say yes, raise it again. You are looking for the point at which you start losing roughly twenty to thirty percent of conversations on price alone. Below that threshold, you are almost certainly leaving money on the table.
A cleaner framework is to start with value, not cost. What does your product allow the customer to do or stop doing? What is that worth to them in dollar terms, whether that is time saved, revenue generated, or cost avoided? Price at a fraction of that number, typically somewhere between ten and thirty percent of the value you create. This gives the customer a clear return on their investment and gives you a defensible number you can explain in a sales conversation.
If you do not know what your product is worth to customers in concrete terms, that is a signal to go have ten more customer conversations before you finalize anything. Ask them what they are spending on the problem today. Ask what the cost of doing nothing would be over the next twelve months. The answers will tell you far more than any competitive pricing research.
What to do with your existing customers
If you already have customers at a price you now realize is too low, do not panic. The standard move is to raise prices for new customers first. Change the number on your website, run it through your next several sales conversations, and see how it lands. Your existing customers are not affected and you get clean signal on whether the new price works.
When you eventually raise prices for existing customers, give them notice, explain the reason simply and directly, and offer a reasonable transition period. Most customers who genuinely value your product will not leave over a price increase that is communicated well. The ones who do leave over a modest increase were probably not the customers who were going to stick around long-term anyway.
The real question to ask yourself
Before you finalize any price, ask yourself this: am I setting this price based on the value I create for customers, or am I setting it based on what feels safe to ask for? If the answer is the latter, you already know you need to rethink the number.
Getting pricing right does not require perfect information. It requires honesty about what you have built, who you built it for, and what problem it actually solves. Start there and the number becomes a lot clearer than you expect.