Pricing

---
name: pricing
description: Use when setting or adjusting prices for a product or service
tags: [pricing, revenue, business-model, monetization]
related_skills: [mvp, first-customers, grow-sustainably]
---

# Pricing

## Core Principle

**Charge something. Always.** There is a massive difference between free and $1 — the "zero price effect." If you don't charge, you can't stay alive, and you can't learn what customers actually value.

## Two Pricing Models

### Cost-Based Pricing
- Calculate your costs (hosting, time, materials, payment processing)
- Add a margin (20-50% is typical)
- Best for: physical products, services with clear costs

### Value-Based Pricing
- Price based on value to the customer, not your costs
- A feature might cost nothing to deliver but be worth a lot
- Best for: software, digital products, services with high perceived value

## Pricing Principles

1. **Start low, raise over time.** Prices go up as products improve.
2. **Pricing is not permanent.** Iterate on it like everything else.
3. **Tiered pricing is the goal.** Economy, business, first class.
4. **Never give it away for free as default.** Even $1 creates a different dynamic.
5. **Free trials are table stakes.** Always with a clear path to paid.

## Code Example: Pricing Math

```
Product: $10/month subscription
Need: $2,000/month to sustain
Customers needed: 200
At 1 new customer per business day: ~10 months
Break-even from customer #1: ✅ (profitable immediately)
```

## Common Pitfalls

| Pitfall | Solution |
|---------|----------|
| Giving product away for free | Charge something — zero price effect is real |
| Setting price once and never revisiting | Pricing is iterative, not permanent |
| Confusing free trials with free products | Trials must have clear path to paid |
| Underpricing due to insecurity | Price based on value to customer, not your costs |
| Not planning tiered pricing | Introduce tiers as you understand segments |

## Verification Checklist

- [ ] Pricing model chosen (cost-based, value-based, or hybrid)
- [ ] Initial price point set with rationale
- [ ] Future tier structure planned
- [ ] Number of customers needed for sustainability calculated
- [ ] Schedule for revisiting/raising prices established