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.