Charge more! Charge less!

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#1

Patrick McKenize (@patio11) has made “Charge more” into his catch cry.

Of course, “charge more” can’t be applied to all people at all times - just 99% of all first-time bootstrappers! Software developers, in particular, need encouragement to price according to the value their product has to their customer - and to understand that this has nothing to do with the effort to create the product.

Justin Jackson (@mijustin) recently wrote a more nuanced blog post on the topic, arguing that perhaps some of us need to charge less:

Maybe you should charge less

We should pay attention to this idea of charging less for the value you provide. It’s the flipside of “charge more,” and it has its own advantages.

By keeping prices low, you make renewing a no-brainer. You make switching ‘not worth the effort.’ You’ll lower ARPU, but you’ll get higher long-term retention.

Perhaps this is a dangerous blog post because some first-timers will use it as justification to give into their fears of charging decent prices.

What’s been your experience with charging less vs charging more?

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#2

What’s odd to me, is we keep having the “charge more” discussion as if the founder’s psychology is the only variable. :stuck_out_tongue_winking_eye:

There are so many other variables that matter more:

  • the competitive landscape
  • customer demand
  • how hard it is to reach, and convert, customers

I’m not super worried about first-timers. From what I’ve seen in MegaMaker, most first-time founders are starting with a competitive pricing strategy. That’s not a bad place to start. It’s a good foundation for adding other techniques, like value-based pricing.

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#3

Patrick specifically talked to noobs at business, whose shared trait was to try and charge ridiculously low prices (the famous $5/mo).

If anyone uncritically applies that advise to businesses in later life cycles, it is not Patrick’s fault.

#4

But it is. The rest have a negligible effect on the new founded business.

The new founder does see that the competitor charges $100/mo, and yet decides to go for $10/mo. Patrick’s Edict™ fixes that most glaring overlook of consequences.

Now the noob can start considering “landscape, demand” and whatnot.

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#5

Maybe it is exactly due to years of crying out the Patrick’s war cry? Because I distinctly remember that was not the case some 10 years ago. (My memory is not perfect, of course.)