Most founders treat pricing as a finance decision. It's a sales decision.
Your price decides who you can sell to, how long deals take, how many reps you can afford, and whether your team spends its time selling value or defending a number. Get it wrong and no sales process will save you.
After years of building sales teams in SaaS, here's what I wish every founder knew before setting their price.
You're probably too cheap
Almost every early-stage SaaS company I work with is underpriced. The founder set a price when they had five customers and no confidence, then never revisited it.
The signal is simple. If nobody pushes back on price, you're too cheap. A healthy price gets some pushback, not from everyone, but from some.
Low prices also cap your go-to-market. A $3K-a-year product can't support a sales team that costs $150K per rep. At that price, you need self-serve or a very high-volume inside sales motion. Price determines the motion, not the other way around.
Cost-plus vs. value-based
Cost-plus starts with what it costs you to deliver and adds a margin. It's easy to calculate and almost always leaves money on the table in software, where the cost to serve one more customer is tiny.
Value-based starts with what the problem costs your customer and prices at a fraction of that. If your product saves a fleet operator $100K a year in fuel and maintenance, $20K a year is an easy decision. $5K is a missed opportunity.
For B2B SaaS, value-based wins nearly every time. But it only works if your sales team can quantify the value, which means discovery has to uncover real numbers. (More on that in discovery call questions.)
Packaging matters as much as price
Three tiers is the standard for a reason. Most buyers pick the middle option, so design the middle tier as the one you want most customers on.
A few rules that help sales:
- Pick one value metric that grows with the customer: seats, vehicles, locations or usage. Price should rise as they get more value.
- Make the tiers clearly different. If a rep can't explain the difference in one sentence, the buyer won't understand it either.
- Keep your best feature in the middle or top tier, not the entry tier.
Discounting is a symptom
If your reps discount on most deals, you have one of three problems: the price is wrong, the value isn't being proven in discovery, or your reps have no authority to hold a line.
Set a discount policy and stick to it. Tie discounts to something you want in return: a multi-year term, an annual prepay, a case study or a faster signature. Never discount just to close.
When to raise prices
Raise prices when you're winning deals easily, customers rarely churn, and your product has clearly improved since you last set the price.
Grandfather existing customers for a period, give them notice, and raise prices for new customers first. Most founders are shocked how little pushback they get.
Pricing and your sales team
Pricing is one of the biggest levers on sales efficiency, and one of the most overlooked. If your reps are working hard and still can't hit quota, check the price before you check the people.
It's one of the areas I review in a Sales Audit. Or book a free strategy call and we'll look at whether your pricing is holding your sales team back.