Chapters (Powered by ChapterMe) - 00:00 - Intro: B2B pricing tips for founders 01:19 - The Value equation for customer satisfaction 04:15 - Value equation and other elements in pricing 04:28 - Cost and margins in software pricing 05:57 - Investing in low-cost LLMs risks land grab 06:26 - Competiton: Value equation, pricing, differentiation 08:03 - Ask champion: How do you pay for software? 08:17 - Essential pricing tips for successful sales 10:08 - Publishing or contact sales for pricing decisions? 10:25 - Value-based pricing for enterprise customers 11:42 - Pricing strategy dictates sales channels 13:42 - Free trials or Pilots? 14:08 - Push customers to sign up for annual contracts, play strengths as startup 16:42 - B2B pricing summary recap: Value, cost, and differentiation strategies for successful pricing 17:30 - Outro
I visited my first customer in Germany today, a multi-billion dollar company, and I applied all the things from the video in the meeting. It worked better than expected, especially the value equation. I just asked about the fair value for the product. Thanks, YC, and perfect timing for me! Best regards, Andrei (RiskCube AI)
What I love about this narrative is that it not only teaches me a task with immediately practical tips, it also really improves the quality of the concept of successful product in my mind
Absolutely phenomenal.advice. my competitors have priced their SaaS really cheaply and I struggled at the start with how to price. I eventually decided just to offer more features and quality and charge double, differentiating myself as "the premium, all-in-one solution."
Man , you should have published this video 2 years ago ! I learned through swet and tears 80% of it in my biz . Now working on the rest 20% ... Thank you !
Feels like the underlying assumption here is that our Champion is on our side. I'm sure it happens sometimes, but for most of us doing B2B sales legwork, the Champion (if we can even call him that) is totally on the prospect's side. Fishing around and trying to maximize our margins isn't a welcomed and encouraged endeavour.
interesting tips, the ways to define product price. also great quote 'instead of getting into a pricing war with competitor rather better try to differentiate your product'
That’s hard to achieve. Enterprise customers hardly ever will buy from you on a ROI 3. They are seeking ROI 10. Too much risk for just 3x on return. They are looking for 10x. So, if you are bringing 1.5M on savings, you will charge 150k or maximum 250k on ROI 6. That’s from my experience. You can aim for ROI 3 if you are very predictable and you have a huge reputation. Not for an early stage startup.
Early stage startup shouldn’t be selling $700K enterprise software. Enterprise doesn’t just buy the product, they buy support, training, customization, and stability of the product, early stage startup can’t provide that. Start with lower market then go up from there.
Great video. This is exactly what I needed right now. In the video, it gets a bit confusing sometimes when you're on a roll and just throwing out numbers without specifying if they're meant to be MRR or ARR. Other than that, this information will be extremely helpful in the months to come.
Tom, thank you for such a concise video. My question what to do with clients who for years are using the product but for very small price. Should we renegotiate the contract and increase the price or it's better not to do anything with them?
First of all thank you for your insigth! A quick question to ask: if our solution creates values in both revenue generating (by increasing the leads) and cost reducing (by reducing the resource allocation of marketing team), which one should I weight more for the value equiation? Is it better to mix both? or just focus on one of the two to highlight our value proposition more?
Thanks Tom, you pricing advice are always gold! A maybe naive question, but I'd love to have your take on it. The product is a hot tech topic with a couple of existing players. 2 are doing well but for this particular product, they sell it for free via cloud, and very cheap via API (certainly not 90% margin). Customer discovery says they'd love to pay for something more scalable, more up to date in performance, and which streamlines the complex tech but with a couple of improvements in UX and quality of output. Is it crazy to try to win the differentiation game against free competitors, at least with what appears to be incremental improvements? The alternative is sacrificing this usecase to do something more niche, but that's a pitty because product 1 is a great data acquisition opportunity to bump the performance of usecase 2. Thanks for the advice!
Awesome video, thanks so much, super helpful! 🙏 I'd have one question: When in the process should one reveal the pricing to the client? I understand you suggest right after the forecasted value equation (esp. when already signing the deal with the 60/90 day money-back guarantee), but that is before the experimental validation. What do you think about postponing giving a number til the experimental validation comes in to not over- or underprice? If so, what do you suggest saying about pricing before experimental validation? For instance, do you suggest providing a relative/absolute range?
Very interesting Tom. Thanks for sharing. I have one question about the value equation: you mentioned that you need to clearly define the equation with your champion and then charge roughly 1/3 of the value the clients receive. Do you disclose this directly to the champion (i.e. "you keep 2/3 and we keep 1/3"), or do you just present it as a price (in your example $ 700k)? If you choose the latter and later find that the value they get after the pilot is much higher, how would you go about raising the price then?
Another question, any tips on how to negotiate the validation? In most cases big clients don't want their logon on the homepage of the products they use.
Is there a benefit in pricing relating to cost now that AI is having more impact on the ability to reduce operations cost? Say the product is aimed at SMBs, with the goal being to obtain a high volume of these customers and largely keep them to a zero to very low touch, then does it make sense to set prices at "no brainer" levels and have those dictated largely by costs?
What about overpricing the software, say 5x and then ask the user how much can they actually pay for? What if the user does not pay for any software, or the ones they use are free and you are coming with a paid option that solves their issues?
Can you expand more about what you mean by losing 25% of your customers to competitors? we should keep lowering our prices until we only lose 25% to our competitors?
Hello, YC solo applicant over here. Semi-technical and business founder building a brain-science based startup. I have built my website + MVP. I can cover product long-term and help with the front-end. Looking for a technical co-founder applying for the Winter '25 batch. Anyone interested?
What are the best strategies to protect my portfolio? I've heard that a downturn will devastate the financial market, so I'm concerned about my $200k stock portfolio..
There are strategies that could be put in place for solid gains regardless of economy situation, but such execution is usually carried out by an investment specialist
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders
My CFA ’ANGELA LYNN SCHILLING’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
Early stage startup shouldn’t be selling $700K enterprise software. Enterprise doesn’t just buy the product, they buy support, training, customization, and stability of the product, early stage startup can’t provide that. Start with lower market then go up from there.
Chapters (Powered by ChapterMe) -
00:00 - Intro: B2B pricing tips for founders
01:19 - The Value equation for customer satisfaction
04:15 - Value equation and other elements in pricing
04:28 - Cost and margins in software pricing
05:57 - Investing in low-cost LLMs risks land grab
06:26 - Competiton: Value equation, pricing, differentiation
08:03 - Ask champion: How do you pay for software?
08:17 - Essential pricing tips for successful sales
10:08 - Publishing or contact sales for pricing decisions?
10:25 - Value-based pricing for enterprise customers
11:42 - Pricing strategy dictates sales channels
13:42 - Free trials or Pilots?
14:08 - Push customers to sign up for annual contracts, play strengths as startup
16:42 - B2B pricing summary recap: Value, cost, and differentiation strategies for successful pricing
17:30 - Outro
How come this comment is two week ago?
@@ahmednawaz4723 The video was created 2 weeks back but was unlisted until yesterday!
@@ahmednawaz4723 Video scheduled for release 2 weeks ago.
@@ahmednawaz4723 YC is our customer and this video was unlisted 2 weeks back and was made public recently.
I visited my first customer in Germany today, a multi-billion dollar company, and I applied all the things from the video in the meeting. It worked better than expected, especially the value equation. I just asked about the fair value for the product. Thanks, YC, and perfect timing for me!
Best regards,
Andrei (RiskCube AI)
Hlo bro please contact for me
What I love about this narrative is that it not only teaches me a task with immediately practical tips, it also really improves the quality of the concept of successful product in my mind
This is gold! The most comprehensive SaaS pricing breakdown from YC so far
15:04 Pick a number, try to sell, increase pricing as you go. Got it!🙏🏼
Absolutely phenomenal.advice. my competitors have priced their SaaS really cheaply and I struggled at the start with how to price. I eventually decided just to offer more features and quality and charge double, differentiating myself as "the premium, all-in-one solution."
Man , you should have published this video 2 years ago ! I learned through swet and tears 80% of it in my biz . Now working on the rest 20% ... Thank you !
Amazing how you condense so many incredible insights into such a simple explanation.
Feels like the underlying assumption here is that our Champion is on our side. I'm sure it happens sometimes, but for most of us doing B2B sales legwork, the Champion (if we can even call him that) is totally on the prospect's side. Fishing around and trying to maximize our margins isn't a welcomed and encouraged endeavour.
Cool. Thank you for this video, Tom and YC! Looking forward to watching the B2C version soon!
Really useful, particularly to those of us who tend to be focused on the technology side.
Unlimited greatfulness for these very useful insight. Thank you YCombinator!!
interesting tips, the ways to define product price. also great quote 'instead of getting into a pricing war with competitor rather better try to differentiate your product'
Very useful! Especially impressed by the increase by 50% each time approach
That’s hard to achieve. Enterprise customers hardly ever will buy from you on a ROI 3. They are seeking ROI 10. Too much risk for just 3x on return. They are looking for 10x. So, if you are bringing 1.5M on savings, you will charge 150k or maximum 250k on ROI 6. That’s from my experience. You can aim for ROI 3 if you are very predictable and you have a huge reputation. Not for an early stage startup.
Thank you very much Tom, and to YC.
This video provided gold advice.
great ideas! Thank you, will start applying tomorrow literally!
This is one of the best I've need on this topic. Will be watching again (and taking notes)
😂
Awesome video! Helped me think different about the current enterprise pricing, I was way underpricing before.
Tom, this gave me a lot of great things to consider with pricing. Thank you! Great job
Early stage startup shouldn’t be selling $700K enterprise software. Enterprise doesn’t just buy the product, they buy support, training, customization, and stability of the product, early stage startup can’t provide that.
Start with lower market then go up from there.
Timely video, thanks
Thank you YC, this is soooooo nice. Your contents are top notch.
Ao much knowledge in such a short time, congratulations
Can we have more of such videos ? :) It was brilliant!
This is incredible set of advises.Thank you for publishing it.
That's pretty cool thank you, it would be nice to learn about the projection for pricing in the long term when you start to scale up.
I have been looking for this information for last 2 weeks. Thanks much ❤
Excellent video. Please upload more of such content.
Great video. This is exactly what I needed right now. In the video, it gets a bit confusing sometimes when you're on a roll and just throwing out numbers without specifying if they're meant to be MRR or ARR. Other than that, this information will be extremely helpful in the months to come.
Beautifully enriching content!!! Thank you YC ✨
Tom, thank you for such a concise video. My question what to do with clients who for years are using the product but for very small price. Should we renegotiate the contract and increase the price or it's better not to do anything with them?
This video came in the right moment, I was struggling with this because need to send a proposal for POC 🎉🎉🎉🎉
First of all thank you for your insigth!
A quick question to ask: if our solution creates values in both revenue generating (by increasing the leads) and cost reducing (by reducing the resource allocation of marketing team), which one should I weight more for the value equiation? Is it better to mix both? or just focus on one of the two to highlight our value proposition more?
Thanks Tom, you pricing advice are always gold!
A maybe naive question, but I'd love to have your take on it. The product is a hot tech topic with a couple of existing players. 2 are doing well but for this particular product, they sell it for free via cloud, and very cheap via API (certainly not 90% margin).
Customer discovery says they'd love to pay for something more scalable, more up to date in performance, and which streamlines the complex tech but with a couple of improvements in UX and quality of output.
Is it crazy to try to win the differentiation game against free competitors, at least with what appears to be incremental improvements?
The alternative is sacrificing this usecase to do something more niche, but that's a pitty because product 1 is a great data acquisition opportunity to bump the performance of usecase 2.
Thanks for the advice!
Absolutely amazing!
awesome! just pure gold
Awesome video, thanks so much, super helpful! 🙏 I'd have one question: When in the process should one reveal the pricing to the client? I understand you suggest right after the forecasted value equation (esp. when already signing the deal with the 60/90 day money-back guarantee), but that is before the experimental validation. What do you think about postponing giving a number til the experimental validation comes in to not over- or underprice? If so, what do you suggest saying about pricing before experimental validation? For instance, do you suggest providing a relative/absolute range?
Thank you for the B2B sales videos!
Please share similar video for B2C pricing strategies, if there is any.
Great video, quite useful and tailored advice. Quite what I needed atm.
Very interesting Tom. Thanks for sharing. I have one question about the value equation: you mentioned that you need to clearly define the equation with your champion and then charge roughly 1/3 of the value the clients receive. Do you disclose this directly to the champion (i.e. "you keep 2/3 and we keep 1/3"), or do you just present it as a price (in your example $ 700k)? If you choose the latter and later find that the value they get after the pilot is much higher, how would you go about raising the price then?
great video, thanks!
Another question, any tips on how to negotiate the validation? In most cases big clients don't want their logon on the homepage of the products they use.
This was amazing, very much needed!
Excellent video. I have a question. Do you apply the same principles and thoughts to hardware companies or do you think differently about that?
Very helpful. Thank you.
Please let me know how we should price the hard tech product prizing .
Remarkable points, Tom. Noted.
This was a great video. Thanks again YC!
Is there a benefit in pricing relating to cost now that AI is having more impact on the ability to reduce operations cost? Say the product is aimed at SMBs, with the goal being to obtain a high volume of these customers and largely keep them to a zero to very low touch, then does it make sense to set prices at "no brainer" levels and have those dictated largely by costs?
Helped a lot
I love u, this solve me many problems
Can you also make another one in pricing for B2C?
What about overpricing the software, say 5x and then ask the user how much can they actually pay for?
What if the user does not pay for any software, or the ones they use are free and you are coming with a paid option that solves their issues?
What do you do when a prospect emails you what is the price so we can decide if we want to try it or not?
Try giving them a short trial, if they see value then discuss how much it's saving for them and apply the 70/30 rule
Amped up after watching this!!
In my personal experience with B2B sales as a startup, you always underprice out of fear of losing deals, which ends up biting you back.
Why does it bite you back?
Can you expand more about what you mean by losing 25% of your customers to competitors? we should keep lowering our prices until we only lose 25% to our competitors?
Thank you, this is good insight.
Waiting for the B2C version
How do you price your service if your business model is transactional ?
what if the traditional pricing in the industry is by comission
❤ amezing idea 💡❤
Hello,
YC solo applicant over here. Semi-technical and business founder building a brain-science based startup.
I have built my website + MVP. I can cover product long-term and help with the front-end.
Looking for a technical co-founder applying for the Winter '25 batch. Anyone interested?
Great example as I'm trying to sell AI voice agent. Maybe I can apply this for teams under 50 employees
Thank you!
GOAT
🔥🔥🔥
Cool
Ship it for free and make the world a better place…
What are the best strategies to protect my portfolio? I've heard that a downturn will devastate the financial market, so I'm concerned about my $200k stock portfolio..
There are strategies that could be put in place for solid gains regardless of economy situation, but such execution is usually carried out by an investment specialist
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders
Mind if I ask you to recommend this particular coach you using their service? Seems you've figured it all out.
My CFA ’ANGELA LYNN SCHILLING’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
Early stage startup shouldn’t be selling $700K enterprise software. Enterprise doesn’t just buy the product, they buy support, training, customization, and stability of the product, early stage startup can’t provide that.
Start with lower market then go up from there.