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The Price Is Right: And for Early-Stage SaaS Companies, It Needs to Be

May 29, 2014

Andreessen Horowitz

Nothing is more critical to a software-as-a-service (SaaS) business than pricing strategy. Pricing is the moment of truth for a new product … and doubly so when it is a company’s first product. But far more often than not, I’ve observed new startups leaving “money on the table” when it comes to pricing enterprise products. I’ve seen founders say their product saves hundreds of thousands of dollars — yet their product is priced as if only saving thousands of dollars.

a16z image: Andreessen Horowitz

One reason for this is assuming the need to price and program similarly to competitive products. With a potentially disruptive product, however, falling into the trap of pricing like a legacy competitor not only leaves money on the table — but it could fail to surface your differentiation.

Said another way, your product is your price and how you price your product reflects value from the buyer…

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