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Do PLG-oriented startups tend to price lower than sales-led ones to reduce friction, or do they often end up at similar price points and just rely on higher volume? I’m trying to benchmark the price level for a self-serve model.

Based on the insights from Price to Scale, PLG (product-led growth) companies don’t necessarily have to set dramatically lower prices compared to sales-led companies. Rather, the key difference lies in how the price is structured and the user acquisition strategy:

• For PLG startups, pricing tends to be crafted to minimize friction. The goal is to offer lower-cost tiers or a freemium model that allows users to self-serve, thereby fostering rapid adoption. This approach is designed to make it as easy as possible for a high volume of users to get started without the delays or hesitations that can occur with more complex, sales-led pricing.

• At the same time, many PLG companies—think of examples like Slack or Yammer—aim for similar absolute price points as their sales-led counterparts. They rely on volume and network effects (B2B virality) to generate revenue. The strategy is not simply “lower price” but rather “right-priced for a frictionless self-service experience” that scales with usage and additional needs over time.

In practical terms, if you’re benchmarking for a self-serve model, consider:

  • Structuring your pricing in tiered or modular packages (as discussed in our book’s sections on good-better-best and modular pricing). This can help align the price with the value delivered for different segments.
  • Balancing price with overall market share optimization. PLG models tend to take advantage of lower friction to capture a broader customer base—a strategy that ultimately drives revenue through volume.

In summary, while PLG-oriented startups do design their pricing to reduce user friction (often resulting in lower entry points), they frequently land in similar price ranges to sales-led models. The difference lies in the approach: PLG leverages self-service and higher volume to achieve scale, rather than relying solely on higher margins per sale. For a more detailed analysis, you might consult the sections on tiered pricing and market share strategies in Price to Scale.

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Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.

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