How to Price Your B2B Product: YC partner shares it all

Avoid engaging in a price war

Pricing your product or service can be one of the most daunting tasks for a startup founder. Fair pricing can not only secure a deal but also ensure long-term profitability and customer satisfaction.

PRICE WAR IS FOR LOSERS

Here are key recommendations by YC Group Partner Tom Blomfield on pricing strategies

Understand the Value Equation

Start by identifying the value your product delivers to your customer. This value could be in the form of cost savings, time savings, or revenue increase. Collaborate with key decision-makers in the customer's organization to derive these values accurately.

This "value equation" acts as a tool for your customer to justify the acquisition to their financial departments. Once this is nailed down, price your product at approximately one-third of this derived value.

Consider Cost, But Don't Start With It

While it's crucial to know what it costs to deliver your service, never use cost as your starting point for pricing. Value-based pricing ensures sustainability and growth.

Costs should only be a flooring measure, ensuring you're never pricing below your base cost unless you have a plan to lower these costs significantly over time.