Pricing and packaging

~8 min read

Why it matters

Price is how you find out whether the pain is real. Free users can like you and still not value the job. A price — even a small one, even a pilot fee — forces a yes or a no you can learn from. Packaging is just the offer around that price: what they get, what they don’t, and how they buy it without a meeting if the purchase is small.

This is an introduction, not a pricing-research program. You do not need a conjoint analysis. You need a number, a reason tied to their workaround, and the nerve to say it out loud.

Core concepts

Charge before you feel ready. Readiness is a feeling. Willingness to pay is a fact. If the wedge saves a real hour or a real dollar, there is a number. See Problem & customer for whether the workaround actually costs them anything.
Price from value, not from your costs. Software margins are high; cost-plus pushes you toward “cheap” and attracts people who do not value the job. A rough value equation for B2B: what does the workaround cost them (people, hours, errors), what fraction do you remove, and can you charge a slice of that (often talked about as a third, not all of it) so they still win?
For consumer or student tools, the value equation is usually time and embarrassment, not headcount. “Replaces two hours every Sunday” is a price anchor. “It’s only $3 so no one thinks” is how you train users that you are optional.
One offer, not a matrix. Early packaging is a single plan a person can say yes to: who it’s for, what they get, the price, the term (monthly, semester, annual pilot). Tiers are what you add after different buyers pull you in different directions. Three tiers on day one is fiction.
Free is a choice with a job. Free is reasonable for a short, defined trial where you need usage data — with an end date. Forever-free “to get users” gives you usage without preference. If they will not pay and will not introduce you to someone who will, you learned something. Write it down.
Raise the price on purpose. The first number is a probe. If everyone says yes immediately, you are low. Move it up for the next buyer until you hear real hesitation, then understand why. Do not discount your way out of a fuzzy wedge.
How they pay is part of packaging. A student organization can Venmo or put it on a department card. A small company can put a card on a Payment Link. An enterprise pilot needs a one-page success criterion, not a procurement fantasy. Pick the path your first buyer can actually complete this month.

What to do next

Write the value in their units: hours saved, errors avoided, or dollars of the current workaround. One paragraph, with numbers you got from a real conversation — mark guesses as guesses.
Pick a single price and a single term for the next five buyers. Write the one-sentence offer: “For [who], [outcome], [price] per [term].”
Say the price live on the next three calls. Do not email it as a footnote. Note the exact words they use when they react.
Decide what is not included. Write it down so you don’t custom-scope every yes into a new company.
If you are pre-company, still charge something small or get a written commitment (“we will pay $X when you can invoice”). A handshake “we’ll pay later” is not a price test.
Revisit the number after five real reactions, not after a Twitter thread about pricing. Connect the result to Metrics — revenue is the metric, not waitlist size.

Mental model

  workaround cost  (their number, not yours)
        |
        v
  your slice of that value  -->  one price
        |
        v
  one package: who / outcome / term / how they pay
        |
        +--> yes, too fast     raise it next time
        +--> yes, with a wince keep, ask what almost stopped them
        +--> no                was it the job, the buyer, or the price?
                               don't assume price first

Packaging is the box around one yes. It is not a pricing page with four columns.

Common failure modes

Waiting to “add pricing later.” Later becomes never, and you have a hobby with servers. The first price can be wrong. Zero is also a price, and it is usually the wrong one.
Copying a public SaaS price. Their price reflects their buyer and their maturity. Your first buyer is a person you can text. Price for that person.
A discount as a substitute for belief. “I’ll give it to you free if you give feedback” buys polite users. Trade a discount for something concrete (a case study, an intro, a longer commitment), or don’t discount.
Custom everything. Every special feature you throw in to close one user is scope. See MVP scope. Price the wedge you have.

Watch

How To Price For B2B | Startup School — Tom Blomfield, Y Combinator. The value equation, why cost is the wrong anchor, and how to talk about a pilot.
Kevin Hale - Startup Pricing 101 — Y Combinator. Pricing as a lever, the mistakes early teams make, and simple rules for moving the number.
Startup Business Models and Pricing | Startup School — Aaron Epstein, Y Combinator. Which shapes of business actually show up, and the pricing lessons from them. Use it to name your model in one line, not to browse models forever.