“We’ll figure out pricing later” is one of the most dangerous sentences in a startup.
Founders often treat pricing as a marketing decision. It’s a financial one. It’s the blueprint for the whole business.
What your price decides
- Your customer: who can afford you.
- Your sales motion: how complex the sale will be.
- Your cost structure: how much support you can afford to give.
- Your positioning: where you sit against the alternatives.
Get it wrong and every other part of the business is an uphill fight.
Price also picks your customers
Customers who push hardest to negotiate your price down are often your worst customers: price-sensitive, high-maintenance and quick to churn.
Price with the math, not a feeling
In one engagement, a consumer brand had no contribution margin by product at all. Once we built it and tested two lower price points, the lower price drove enough extra volume to lift holiday revenue 40% year over year, without stockouts. You can’t make that call without the unit math.
Scorecard