Avoid The Most Common Pricing Mistakes

Pricing isn’t a one-time decision; it’s a dynamic process that requires ongoing adjustment.

Don’t let outdated strategies or competitive copying undermine your product’s true value.

Here are the key mistakes to avoid for effective pricing that resonates with customers and maximises your startup’s revenue potential:

Forwarded this email? Join 1,200+ founders and sign up!

TL;DR

1. Not updating the pricing for a longer period
   Pricing isn’t a one-time decision. Failing to adjust with market trends and product growth means you could be undercharging or signaling outdated value.
   

2. Putting all eggs in the feature-comparison basket
   Customers buy solutions, not features. Prioritizing feature-by-feature comparisons can distract from the core value your product provides.
   

3. Overcomplicating pricing tiers
   Keep it simple. Too many options create decision fatigue. Each tier should clearly reflect a meaningful upgrade.
   

4. Not showing your enterprise pricing
   Transparency builds trust. Don’t make customers dig for information. Offering a ballpark figure upfront establishes credibility.
   

5. Discounting too early, or too often
   Discounts can devalue your product. Frequent discounts make customers expect deals. Save them for specific cases to protect perceived value.
   

6. Copying competitors too closely
   Your product isn’t theirs. Mimicking competitors’ pricing ignores your unique value proposition. Focus on what makes you distinct, not what others are charging.
   

7. Setting prices based on costs
   Costs don’t reflect value. Pricing purely on cost structure overlooks what customers are willing to pay. Price based on the value you deliver, not just on margins.

🧡 P.S. Know someone ready to level up as a founder (or become one)? Share this newsletter and help their journey.

1. Not updating the pricing for a longer period

Pricing isn’t a one-and-done decision. Market dynamics evolve, customer expectations shift, and your product grows in capability. If you’re still charging what you did years ago, you may be underpricing or signaling that your product hasn’t kept up.

A periodic pricing review helps you stay aligned with the value you offer and ensures you’re not leaving money on the table.

2. Putting all eggs in the feature-comparison basket

Customers care more about solutions than features. It’s easy to get caught up in comparing every feature against competitors, but this can distract from the core value of your product.

Customers want outcomes, not just checkboxes on a feature list. Overemphasis on feature-by-feature comparisons often undervalues the overall solution you provide.

Oh no, so the chart companies use to sell me something are not completely objective? Who would have told.

If you insist on including this, make it core features only, so the list does fit in 3 screenshots, unlike these two companies.

3. Overcomplicating pricing tiers

Simplicity sells.

When you present too many pricing tiers, customers face decision fatigue, making it harder for them to choose. Each tier should represent a meaningful upgrade in value that’s clear at a glance.

Too many options or unclear distinctions can make your offering feel overwhelming or even discourage purchase.

This is something you do not want: 

If I need to book a consultation to get a price range for your product, you are damn sure I am not using your software. It’s like walking into KFC only to be told they serve only broccoli. It may be the best broccoli in the world, yet no one will ever order it.

4. Not showing your enterprise pricing

In a recent trend, most companies hide their enterprise pricing. It creates a negative aura surrounding the product.

Transparency creates credibility.

Enterprise customers need a ballpark figure to even consider a conversation, so hiding pricing can deter serious buyers. Providing a baseline or range for enterprise packages signals that you understand customer needs and are confident in your pricing.

Give potential enterprise customers an idea of what they’re getting into, even if you expect customisations. There is not a single customer that will not appreciate you for doing this.

5. Discounting too early, or too often

Discounting can dilute perceived value. Frequent or premature discounts can train customers to wait for deals, devaluing your product in their eyes.

Instead, consider using discounts strategically, such as during limited campaigns or to close large accounts.

Discounts should be the exception, not the expectation. Let your product justify the price.

Over time, this will protect your brand’s value perception and keep customers focused on the benefits, not the price tag.

Let your product avoid the path of “HelloFresh enshittification“.

6. Copying competitors too closely

Your product is yours, their is theirs.

While it’s tempting to mimic competitors’ pricing strategies, this often ignores your unique value proposition and market position.

Simply copying them may overlook the distinct benefits or specialised features you provide.

If you only watch your competitor’s pricing and adjust yours accordingly, it’s only matter of time until you race to the bottom. Price based on what makes you different, not what your competitors are charging.

In the end, your product is better. Surely.

7. Setting prices based on costs

Costs ≠ value.

Setting your price strictly based on what it costs to produce overlooks the value your product brings to the customer.

Price should reflect the problem you solve and the results customers achieve, not just a margin over your expenses.

Focus on what customers are willing to pay for the impact your product delivers, not just covering your operational expenses.

✈️ How I Can Help

📩 Get a free pitch deck

Raising soon? I’ll send you over Passionfroot’s pitch deck that raised over $3M, just refer one friend via your personal referral link: https://foundersfuel.beehiiv.com/subscribe?ref=PLACEHOLDER

Additionally, I’ll add you to a private founder community where I post valuable resources daily.