#28 — Cold Take: Don't price your enterprise product until you have to

Our take: Early-stage companies should avoid concrete pricing for as long as possible. Here's why and how to figure out what to charge.§

Why it matters: Founders often focus on pricing mechanics (seats, users, frequency) when they should be focusing on the perceived value their product delivers to enterprise customers.§

The reality: In enterprise sales, customers will pay based on how much value they believe your product provides their organization.§

• If they think your tool saves them $1M annually, they might pay $100K-$500K
• Your goal with early customers is determining this perceived worth

Value metrics to track:§

• Engineering time saved
• Infrastructure costs reduced
• Faster product market entry
• Downtime prevention
• Conversion increases

How it works: A recent observability company example combined two value streams:§

1. Reducing existing observability bills
2. Enabling deeper insights into mobile fleets

They created a pricing model charging per GB ingested, targeting about 10% of the perceived value.§

Avoid pricing too early

When customers ask about pricing before you're ready:§

• "Here's the list pricing, but it depends on many factors"
• "There's a wide range of what our existing customers pay"
• "Until we scope your use case we can't know"

The bottom line: Focus on finding the right customers and use cases first, not maximizing revenue.§

Align on value perception

From day one:§

• Anchor discussions in your value proposition
• Mention it consistently in every conversation
• Document it in POC materials
• Check regularly that value is being delivered

When pricing time comes: Create a data-driven case showing how much monetary value you're providing.§

• Example: If you're saving them 10 engineering hires worth $300K each, you're providing $3M in value
• Charge a small fraction of that value annually

The takeaway: Hold back on publishing a pricing model until you've established a repeatable process for determining and communicating your value.§

Go deeper: Avoid charging for POCs - they're about determining value first, then pricing. Large companies are already taking a risk on unproven technology; don't make them involve procurement yet.§