![]() ![]() Mistake #4: The pricing structure is overengineered. If you’ve already started from a low price and are hesitant to raise it over time, you’re already capping your growth.” “This instinct is especially problematic when paired with the rampant belief that it’s very hard to raise prices, but that lowering them is easier. That’s how founders talk themselves into the discounted side of the pendulum,” says Gaffney. Instead of letting the market tell them where they’re not going to win deals, they’d rather price lower and end up trying to interpret where on the pricing spectrum they’ve landed. ![]() Very rarely do I encounter early-stage founders who’ve priced their product too high. “Even the most confident teams price too low. “Founders pick what should be a pricing starting point, but stick to it as if it’s a permanent solution, even though their businesses are growing and changing. This is the price we’re taking to market,’” says Gaffney. They pick a price, get a few affirming nods from colleagues - and possibly a few early leads as well - and declare, ‘This is it. “When it comes to setting a product’s introductory price, Gaffney sees founders falling into a common psychological trap. Mistake #2: Prices are set in stone, not in motion. The best I’ve seen do 3-5 daily customer meetings.” “Founders must get out of the their boxes - computer screen, office, city block - and meet with customers. All the answers are in your customers’ heads,” says Gaffney. Instead, they should be having conversations. “People get caught up behind the computer screen trying to figure pricing out, or doing a ton of benchmarking and research. Mistake #1: Prices are conjured without customers. Here are the mistakes he says B2B startups commit over and over again. Though that advice seems straightforward, Gaffney finds many startup teams fail to appreciate how price underpins their overall go-to-market approach. Each conversation is another signal telling you if you’re moving in the right direction, or if you need to adapt and change.” Getting pricing right requires an experimental mindset and willingness to have an honest dialogue with potential customers - the same sort of mindset that is key to success at the early stage in general. ![]() “You can’t anchor to a mound of customer data, because you simply don’t have it yet,” says Gaffney. Gaffney is a firm believer that pricing is more art than science for early-stage B2B startups. MAJOR PITFALLS TO SIDESTEP WITH B2B PRICING Read on to learn what missteps to avoid, early experiments to run, how to frame your price to early customers, mitigate their concerns along the way, and where to look to find the answers to many of the hardest pricing questions. In this exclusive interview, Gaffney gives early-stage founders of B2B startups a better sense of where to start, and demystifies the complexity around pricing experimentation by walking through his most fundamental pricing principles. Now as the CEO of Entrepid Partners, Gaffney’s made his name by helping early-stage B2B startups drive revenue. He knows how the pieces must eventually fit together, having taken WePay from 0 to $50M in revenue and sold big medical equipment at GE. This is a natural approach, because early-stage companies often lack the resources - the brand recognition, troves of customer data, pricing experts crunching scenarios, or runway to execute - but it can turn into a big problem, especially when you consider how pricing can play an instrumental role in going to market.Īs First Round Capital’s Sales Expert in Residence, Gaffney has a unique perspective on how early-stage B2B pricing and go-to-market strategy takes shape, having worked with 30+ Seed or Series A-stage startups over the last two years. The common thread? Many tend to make pricing decisions largely in a vacuum and dangerously removed from a broader go-to-market strategy. Though he’s nearly seen it all, Tyler Gaffney still gets surprised when early-stage B2B startups tell him how they’ve determined their pricing. ![]()
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