Pricing Your First Version When You Have No Idea What to Charge

Pricing is one of the parts of an early startup that founders avoid for the longest, partly because the question feels uncomfortable to think about and partly because the available advice is so contradictory that it is easier to not decide than to risk being wrong. Some sources tell you to charge nothing in the early days, some tell you to charge from the first user, some tell you to follow your competitors, and some tell you to ignore competitors entirely.

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The result is that many founders ship their first version without a price and then spend the next six months trying to figure out what to charge after the conversation should already have happened.

This piegece is about how to set early pricing without a finance background, including the case for charging from day one, the simple rule that gets you most of the way there, and the small experiments that teach you what your real price is.

Why charging from day one matters

The case for charging from day one is not really about revenue, since the amount of money a small early product can produce is rarely large enough to affect the company runway. The case is about learning, because a customer who pays for something has given you the clearest possible signal that the product is doing real work, while a customer who uses something for free has given you a much weaker signal that the product is interesting enough to try.

The difference between the two signals matters most in the first year, when the founder is still figuring out whether the problem is real. A free product can attract dozens of users who would never have paid for it, and those users will give you feedback that is genuine but misleading, since their willingness to talk to you was not gated by any commitment. A paid product, even at a small price, filters for users who have decided the problem is worth solving, and those are the users whose feedback is worth building on.

The simple rule that gets you started

The simplest pricing rule for an early product is to look at what your potential customer is already spending on the workaround they currently use, and to price your product at roughly the same level, because that level reflects what they have already decided the problem is worth.

• If a small business owner currently spends thirty dollars a month on a half working spreadsheet template and a calendar plugin to manage their bookings, a price of twenty to forty dollars a month for a product that replaces both is in the right range.

• If a student currently spends nothing on the problem because no acceptable solution exists, a price of five to fifteen dollars a month is in the right range, because the price signals that the product is worth something without asking the user to make a meaningfully larger commitment than they have ever made in the category.

The rule will not produce a perfect price, but it will produce a price that is in the right zone, and the right zone is good enough at this stage, because the goal is not to optimize pricing but to learn whether the product is worth paying for at all.

The mistakes to avoid

1. The first mistake to avoid is setting your price by looking at competitors with much more developed products, since competitor pricing reflects everything the competitor has built, including the brand, the integrations, the customer success team, and the reliability that comes from years of work. A new product priced at the same level as a mature competitor will feel overpriced to most early users, while a new product priced too far below the competitor will struggle to convey that it is doing the same work.

2. The second mistake is asking users what they would pay, since the answers are almost always lower than what they would actually pay if presented with a real product and a real price. Users underestimate their own willingness to pay because the question is abstract, and the gap between what they say and what they do can be wide enough that the survey data is more misleading than helpful. The better approach is to set a price, present it, and watch what users actually do, because behavior is a more reliable signal than self report.

3. The third mistake is leaving the price off the page entirely. A landing page without pricing forces every interested visitor into a conversation with you before they can make a decision, which feels like it should be useful but actually filters out the customers who would have bought without needing a sales conversation, and those are often the customers whose feedback you most need.

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Small experiments that teach you the right price

Once you have a starting price, the next step is to run small experiments that teach you whether the price is too low, too high, or roughly right.

1. The simplest experiment is to raise the price by twenty percent for new customers and watch what happens to conversion. If conversion holds steady or only drops slightly, the original price was probably too low. If conversion falls sharply, the original price was probably closer to right, and the higher price may be beyond what early users are willing to commit to.

2. A second useful experiment is to offer the same product at two different prices to similar groups of users, with the higher price including a small additional commitment such as a quarterly billing cycle or a longer trial. The point of the experiment is not to find the perfect price but to learn how price sensitive your users are, because the answer to that question shapes much of the rest of your strategy, including how you describe the product and which segments you target first.

"The number is not magic, but it grounds the price in something meaningful, and most founders who use it find that it produces a price that customers accept without difficulty."

What to do when you have no comparison

If you cannot find a workaround or a competitor to anchor against, which sometimes happens with very early or unusual products, the simplest fallback is to charge enough that ten paying customers would meaningfully contribute to your monthly expenses, because that number forces the price to reflect the real cost of the product rather than an arbitrary low number. For most founders this lands somewhere between twenty and one hundred dollars a month for a software product, with higher prices appropriate for products targeting businesses and lower prices appropriate for products targeting individuals.

The number is not magic, but it grounds the price in something meaningful, and most founders who use it find that it produces a price that customers accept without difficulty.

A closing thought

Pricing is uncomfortable to think about in the first months of a startup, but the discomfort is worth pushing through, since the clarity that comes from charging for your work is one of the cleanest signals available to an early founder. Start with the workaround your customer already uses, set a price that lands in roughly the same zone, put the price on your page, and let the early customers teach you whether you are too low or too high. The price will move over time, and that is expected, but the practice of charging from day one will produce a better company than the practice of waiting until the answer is obvious, because the answer becomes obvious only after you have charged for a while.