Your Pricing is Probably Wrong. Here's How to Fix It.

Just a quick question... How did you land on your current pricing?

If you're like 90% of founders, the answer is probably one of these:

• "I looked at what my competitors charge."

• "It just... felt right?"

• "An early customer said they'd pay £X, so we went with that."

Let's be real: this is guesswork, not strategy.

We treat pricing as a one-time decision we make in a panic before launch, but it's one of the most powerful—and neglected—growth levers in your entire business. Getting it right can have a more dramatic impact on your bottom line than almost anything else.

The good news? You don't have to get it perfect on day one. You just need a framework to get it less wrong over time. It's time to treat pricing like a product: something you build, test, and iterate on.

How to Stop Guessing: The Three Pricing Lenses

Before you can build, you need a blueprint. Most pricing strategies fall into three categories. Understanding them shows you where you are and where you need to be.

• 1. Competitor-Based Pricing: You look at what others charge and price yourself somewhere in the middle. It's easy, but it's a trap. You're assuming your competitors have a clue what they're doing, and you're anchoring your value to theirs, not your own.

• 2. Cost-Plus Pricing: You calculate your costs (e.g., server space, salaries) and add a margin. This makes sense for building a bridge, but for software, where your marginal cost is near-zero, it completely fails to capture the value you create.

• 3. Value-Based Pricing 🏆: This is the goal. You charge based on the value, ROI, or cost-savings you provide to your customer. It detaches your price from your costs and competitors and anchors it to the outcome you deliver. It’s harder because it requires you to truly understand your customer, but it's the only way to build a high-growth, profitable business.

Your Toolkit: The Levers You Can Actually Pull

Pricing isn't a single number. It's a system of levers you can adjust to find the sweet spot between customer value and your revenue goals.

• The Price Anchor: What are you actually charging for? Is it per seat, per user, per 1,000 contacts, per project? This is your core value metric. If customers get more value as they use your product more, your price anchor should reflect that.

• Feature Tiers ("Good, Better, Best"): The classic 3-tier model isn't just about offering options; it's psychology. It helps you capture different segments of the market and uses the middle "Best" option as an anchor to make your target plan look like the most logical choice.

• Usage Tiers: This is perfect for products where value scales directly with consumption (e.g., data storage, API calls, emails sent). It feels fair to the customer and allows your revenue to grow automatically alongside your most successful users.

• The Annual Discount: This is the simplest lever for improving your cash flow. Offering a 10-20% discount for an annual upfront payment can pull a huge amount of cash forward, dramatically extending your runway.

The Agile Part: How to Iterate Safely

Okay, so you think your pricing might be wrong. How do you change it without alienating your entire user base? You test and iterate, just like your product.

1. Talk to Your Customers: Don't ask "what would you pay?" Ask "what is the most valuable thing this product does for you?" and "What would happen if you couldn't use this anymore?" The answers will tell you where your real value lies.

2. A/B Test on New Visitors: You can easily test different pricing packages on your website's landing page for new traffic. You don't have to change anything for existing customers to learn what messages and price points resonate most.

3. Grandfather Your Early Adopters: This is the golden rule. When you do raise prices, reward your loyal, early customers by letting them keep their current price, either forever or for an extended period. It builds incredible goodwill and makes them feel like valued insiders.

The Bottom Line: Why This Matters for Your Model

Still think pricing is a "soft" topic? Let's run the numbers.

A 5% increase in customer acquisition might improve your bottom line by 5%. But for a typical SaaS business, a 5% increase in price can increase your profits by 25-50%.

It directly impacts your most important metrics—boosting your Lifetime Value (LTV) and shortening your CAC Payback Period.

If you're ready to stop leaving money on the table and turn your pricing into a genuine growth engine, reach out. This is one of the most strategic conversations a founder can have.