Last year, a founder friend increased his prices by 400% overnight.
I thought he'd lost his mind. His customers thought he'd finally gotten serious.
Revenue jumped. Churn dropped. Support tickets fell by half.
That shocking experience leads to a critical question: How much money are founders leaving on the table by underpricing?
The answer is often millions of dollars over the lifetime of a business.
But here's what really hurts: customers are often WILLING to pay more. They just aren't being asked to.
This guide will show you how to discover your real pricing power, increase your revenue without adding a single feature, and why much of the conventional wisdom about SaaS pricing is probably wrong.
The Founder's Pricing Trauma
Most founders underprice their products. The reasons are almost always psychological:
- Imposter syndrome: "Who am I to charge $299/month?"
- Competition fear: "My competitor only charges $49."
- Rejection anxiety: "What if nobody buys?"
- Feature insecurity: "I need to build more features before I can charge more."
Here's the reality: customers don't pay for your confidence or your features; they pay for the value you create for them. Companies that price based on value consistently have higher margins and attract better customers.
The Value Metric Revolution
The biggest breakthrough in pricing comes from choosing the right value metric—the unit you charge for.
- Per Seat/User: The most common, but often not the best. It can discourage team adoption.
- Usage-Based: Charging for API calls, data stored, or events tracked. This aligns your price with the customer's consumption.
- Feature Tiers: Unlocking more features at higher price points.
- Value-Based: Charging a percentage of revenue generated or money saved. This is the most difficult to implement but has the highest potential.
A shocking finding from observing many SaaS companies is that those who charge based on a clear value metric often make significantly more per account than those charging a simple flat rate or per-seat fee.
The Pricing Page Experiments That Actually Work
Your pricing page is one of the most important pages on your site. Here’s what has been shown to move the needle:
- Price Anchoring: Show your highest-priced plan first (on the left) or visually emphasize your target plan as "Most Popular."
- Enterprise Tier: Always include a "Contact Us" tier for enterprise customers. It makes your other plans look more affordable and captures high-value leads.
- Annual Discounts: Offer a discount for paying annually, and frame the savings in dollars ("Save $120/year") rather than a percentage.
- Trust & Social Proof: Use testimonials, customer logos, and money-back guarantees to reduce friction and build trust.
The Psychological Pricing Tricks That Shouldn't Work (But Do)
The Decoy Effect
This involves adding a third pricing tier that is intentionally less attractive to make one of the other tiers seem like a much better deal. For example:
- Basic: $49/month
- Pro (Decoy): $99/month
- Pro+: $109/month (with significantly more features than Pro)
In this scenario, the Pro+ plan looks like an incredible deal compared to the Pro plan, and it can dramatically increase the average revenue per customer.
Charm Pricing
While ending prices in "9" is common, for B2B SaaS, prices ending in "7" (e.g., $97, $297) can sometimes outperform those ending in "99." It's worth testing what resonates with your audience.
The Price Increase Playbook That Actually Works
Here’s a simple playbook for executing a price increase with minimal churn.
The 6-Week Price Increase Timeline
- Week -6: Analysis. Calculate your unit economics and survey your best customers about the value they receive.
- Week -4: Decision. Decide on the new pricing structure. If your margins are low or your close rate is very high, you can likely sustain a significant increase.
- Week -2: Preparation. Draft announcement emails, update your website and marketing materials, and prepare your support team.
- Week 0: Announcement. Email your existing customers and update your website. The best time is often a Tuesday morning in your customers' primary timezone.
- Week +2: Follow-up. Personally reach out to high-value accounts and offer annual lock-in rates to reduce churn anxiety.
- Week +4: Analyze. Measure the impact on MRR, churn, and new sales.
The Email Template That Minimizes Churn
When announcing a price increase, lead with the value you've added, not the price itself.
Subject: We're investing in making [Product] better for you
Hi [First Name],
When we started [Product], our vision was to [original mission]. Thanks to customers like you, we've been able to invest heavily in the product over the past year, shipping [X new features] and improving [a key metric like uptime or performance].
To continue this momentum and deliver even more value, we're updating our pricing for new customers starting [Date].
**What this means for you:**
As a thank you for your loyalty, your current price of $[X]/month will remain locked in until [Date + 6 months]. After that, your new price will be $[Y]/month.
If you'd like to lock in your current pricing for longer, you can switch to an annual plan before [Date].
**Why the change?**
The new pricing better reflects the value we deliver and ensures we can continue improving the product for years to come.
Questions? Just hit reply. We're happy to chat.
Thank you for being part of our journey.
[Founder Name]
The Final Truth About Pricing
Your pricing is probably too low.
That's good news. It means you have revenue sitting there, waiting to be claimed. You don't need more features. You don't need more customers. You just need the courage to charge what you're worth.
Your customers want to pay for value. Give them permission by charging accordingly.
Stop building features. Start raising prices.
Currently underpricing your SaaS? Join BuildVoyage and track your pricing evolution. Share your journey from "this feels expensive" to "we should have charged more from day one." Your pricing story could inspire another founder to finally charge what they're worth.
