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MODULE 3: PRICE IT LIKE YOU MEAN IT
Most founders underprice by 50-70%.
Two bad assumptions drive this:
- "I'm not a real developer, so I should charge less" (wrong)
- "Lower price = more customers" (wrong)
You're not selling code, you're selling outcomes.
Lower price attracts wrong customers (price-sensitive, high-churn, high-support). Higher price filters for right customers (value-focused, low-churn, low-support).
Value-Based Pricing Framework
Don't price based on costs or competitors. Price based on value delivered.
Step 1: Calculate the economic value
What does your app help users:
- Save (time, money, resources)
- Make (revenue, opportunities)
- Avoid (fines, errors, risks)
Example: Real estate agent's portal
- Replaces: $500/month training programs
- Saves: 10 hours/month of manual training
- Value: $500/month (replacement) + $300/month (time at $30/hour)
- Economic value: ~$800/month
- They charge: $100/month (87% discount to alternative)
Choose Your Pricing Model
Subscription vs. One-Time Purchase
Subscription (MRR):
- ✅ Predictable revenue
- ✅ Compound growth
- ✅ Higher lifetime value
- ❌ Requires ongoing value delivery
One-time purchase:
- ✅ Easier to sell ("pay once")
- ✅ Lower churn concerns
- ❌ Have to constantly find new customers
- ❌ Lower lifetime value
Pro tip: Freemium only works at scale. If you need 1,000 free users to get 20 paid users, you need massive distribution. For most first-time builders, start with paid-only or very limited free tier.
Choose Your Price Point
Most successful apps have 2-3 tiers:
Example Pricing Structure
Free - $0/month
- 3 projects
- Basic features
- Community support
- Anything branding
Pro - $30/month
- Unlimited projects
- Advanced features
- Priority support
- Remove branding
Team - $100/month
- Everything in Pro
- Team collaboration
- Admin controls
- SSO + security
Why this works:
- Free tier generates word-of-mouth
- Pro tier is obviously better (most convert here)
- Team tier captures high-value users
- Clear upgrade path
Free tier is a demo, not a product. It should make you want the paid version.
Pricing Benchmarks by Category
Consumer apps: $5-20/month
- Habit trackers
- Meal planners
- Personal finance
- Meditation apps
Professional tools: $20-100/month
- Industry-specific software
- Productivity tools
- Professional networks
- Training platforms
B2B SaaS: $50-500/month
- Team collaboration
- Business analytics
- Workflow automation
- Enterprise features
The 2-Week Payment Rule
Every successful builder charged by week 2-3. None waited for "100 free users first."
Their approach:
Week 1: Build
Week 2: Show 10-20 people
Week 3: Add payment, ask who'll pay
Week 4: Have 3-5 paying customers
Why this matters:
- Paying customers give honest feedback. Free users are polite. Paying customers tell you what's broken.
- Revenue validates the problem is real. People vote with their wallets.
- Forces you to articulate value clearly. You have to explain why it's worth $X/month.
Common Pricing Mistakes
Mistake 1: Pricing too low to "get traction"
The thinking: "If I charge $5/month instead of $30/month, I'll get 6x more customers"
The reality: You get 2x more customers who churn 3x faster and need 5x more support.
Mistake 2: "Testing" with free first
The thinking: "I'll get 100 free users, then convert them to paid"
The reality: Free users have different behavior than paid users. You learn nothing about your real customers.
Mistake 3: Copying competitor pricing
The thinking: "Competitor X charges $20, so I should charge $15 to win"
The reality: You're competing on price, not value. Race to the bottom.
Mistake 4: Not raising prices
The thinking: "I promised early users $X/month forever"
The reality: Your product improved. Your support improved. Your positioning improved. Grandfather early users. Charge new customers more.
When to Raise Prices
Raise prices when:
- You've added significant features
- Your support quality improved
- You have testimonials/social proof
- Demand exceeds your capacity
- You want to filter for better customers
How to do it:
- Grandfather existing customers (they stay at old price)
- Announce new pricing 30 days ahead
- Show what's changed (features, support, value)
- Offer upgrade incentive for annual plans
What's Next?
✅ Have your pricing locked in? → Module 4: Get Your First 100 Customers →
📌 Other modules in this series:
