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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In the fast-paced world of SaaS startups, founders often face a critical question: should you focus on pricing strategy before achieving product-market fit (PMF)? With limited resources and the pressure to gain traction, it's tempting to postpone pricing decisions until your product proves its market viability. But is this approach wise, or could early pricing consideration actually accelerate your path to success?
What is Product-Market Fit?
Before diving into the pricing question, let's clarify what PMF actually means. Product-market fit occurs when your product satisfies a strong market demand. As Marc Andreessen famously defined it, PMF means "being in a good market with a product that can satisfy that market."
For pre-PMF startups, your primary focus is validating that your solution addresses a real, painful problem for a specific customer segment willing to pay for your solution.
The Traditional View: Pricing Comes After PMF
Many startup advisors and investors advocate for a "worry about pricing later" approach. According to this view:
- Finding PMF should be your sole focus
- Early pricing discussions distract from product development
- You need real users first to understand value perception
- Premature optimization of pricing could lead to missed opportunities
Y Combinator partner Dalton Caldwell reinforces this perspective: "Before product-market fit, your focus should be on learning, not optimizing. Pricing optimization is a form of optimization."
The Case for Early Pricing Consideration
However, a growing number of successful founders and SaaS experts argue that pricing shouldn't be an afterthought. Here's why:
1. Pricing is Product
Your pricing model isn't just a revenue strategy—it's fundamentally part of your product design. Patrick Campbell, founder of ProfitWell (acquired by Paddle), explains: "Your pricing strategy impacts what features you build, who you're building for, and how you position your product in the market."
2. Pricing Shapes Customer Perception
Early pricing decisions send signals about your value proposition. A product priced too low might be perceived as low quality or lacking robust features, while pricing too high creates expectations that your pre-PMF product might not meet.
3. Pricing Influences Acquisition Strategy
How you price directly impacts your customer acquisition approach. A $10/month product requires a different go-to-market strategy than a $1,000/month enterprise solution.
4. Price Testing Provides Valuable Feedback
Testing different price points early can reveal insights about your market's willingness to pay and validate whether your business model has potential. According to a study by Price Intelligently, a mere 1% improvement in pricing can yield an 11% increase in profit.
Finding the Middle Path: Strategic Pricing Considerations Pre-PMF
The most practical approach appears to be a middle ground—having a thoughtful pricing framework without obsessing over optimization. Here's how to approach pricing pre-PMF:
1. Start with Value Metrics
Identify how customers derive value from your solution. Is it through time saved, revenue generated, or problems avoided? These value metrics should inform your pricing structure.
Elena Verna, former growth leader at SurveyMonkey and Miro, suggests: "Find the metric that grows as your customer derives more value. This creates alignment between what you charge and the value customers receive."
2. Implement Simple, Flexible Pricing
Pre-PMF isn't the time for complex pricing tiers or intricate feature gates. Consider:
- A simple monthly subscription
- A straightforward freemium model
- Limited tiers (2-3 maximum)
- Easy upgrade/downgrade paths
3. Gather Pricing Feedback During Customer Development
When interviewing potential customers, include questions about pricing:
- "What would you expect to pay for a solution like this?"
- "How does your company typically budget for tools in this category?"
- "What ROI would you need to justify this purchase?"
Jason Lemkin, founder of SaaStr, recommends: "Talk to at least 10-20 prospects about pricing before you launch. Their feedback will be illuminating."
4. Focus on Learning, Not Maximizing Revenue
Your goal pre-PMF isn't revenue optimization. Use pricing as a learning tool to:
- Test price sensitivity
- Understand which features drive willingness to pay
- Identify potential customer segments
Real-World Examples: Pricing Strategy Pre-PMF
Slack's Approach
Slack focused on adoption first but had a clear pricing model from early stages. They chose a per-seat model with a generous free tier, allowing them to grow through viral adoption while having a clear path to revenue.
Notion's Strategy
Notion offered a generous free plan for individuals but implemented team pricing early. This allowed them to build a devoted user base while establishing business model viability.
Superhuman's Premium Positioning
Superhuman took a different approach, charging $30/month from the beginning and creating an invite-only system. This premium positioning helped them attract the right early adopters and build exclusivity.
When to Evolve Your Pricing Strategy
As you approach PMF, watch for these signals that it's time to revisit pricing:
- Customer acquisition becomes predictable
- Churn stabilizes at an acceptable level
- Users clearly articulate your product's value
- You receive feedback that certain customers would pay more
- Your unit economics show potential viability
Conclusion: Pricing as a Learning Tool Pre-PMF
The question isn't whether to worry about pricing pre-PMF, but rather how to approach pricing strategically during this phase. Instead of viewing pricing as simply a revenue mechanism, see it as a tool for learning, customer segmentation, and product direction.
Your pre-PMF pricing strategy doesn't need to be perfect—it needs to be thoughtful, aligned with your value proposition, and flexible enough to evolve as you learn. By considering pricing early but maintaining adaptability, you set the foundation for both achieving PMF and building a sustainable business model.
Remember that pricing, product, and positioning form an interconnected triangle. Neglecting any corner of this triangle—even in the earliest stages—may lead to a longer, more difficult path to product-market fit.