5 mistakes that kept my business stuck at $0

When it comes to exploring a new website, I have a little trick: I go straight to the pricing section. This strategy lets me assess the product’s value quickly, as pricing is part of marketing that can make or break your startup.

Initially, I struggled with pricing my product due to traditional business advice that didn’t quite fit my needs. After building 24 tiny businesses and trying various unconventional pricing methods, I managed to make a million dollars as a solo developer. In this article, I share the five pricing mistakes I made that hindered my startup’s growth, starting with the most controversial.

Mistake #1: Overusing Subscription Models

Many people believe a subscription model is key to generating passive income, but it often backfires. The truth is, customers generally dislike subscriptions. When I see a product priced at $9 a month, I instantly calculate it as $108 per year, which adds to my existing subscriptions like Netflix and Spotify.

Subscriptions create objections in the buyer's mind, leading to confusion and lowered conversion rates. Selling a one-time product can be as challenging as selling a subscription.

For instance, consider two products: one is a subscription at $10 per month with a 10% churn rate, while the other is a one-time payment product for $100. If you attract 100 customers to both, within a year, you’d earn:

• $11,000 with the subscription model, which would decline as subscriptions canceled.
• $10,000 instantly with the one-time payment option, but without the churn headache.

Do you prefer $10,000 now or spread over four years? For many products, a lifetime deal can be a great competitive advantage, leading to customer loyalty without subscription headaches. If overuse concerns you, consider implementing a credit-based system, which can also help with customer satisfaction.

Mistake #2: Not Anchoring Your Price

When purchasing products like coffee, we tend to expect prices based on location. But pricing software can feel nebulous. Without a price anchor—that is, an initial price for comparison—customers may struggle to understand your product's worth.

For example, in one of my projects, I posted a base price of $69, but I introduced a higher "anchor" price. The higher price provides context, making the original price seem more reasonable. This strategy applies to various products, so consider offering tiered pricing to simplify choices; just avoid overwhelming customers with too many options.

Mistake #3: Holding onto Free Plans

Many startups begin with free apps that gain traction before monetization. However, as a solo developer, I recognized that a free plan can drain resources without delivering value. I eliminated free plans, which helped me attract users who were genuinely invested because they provided credit card information.

Afterward, I found my products improved thanks to better user feedback, I was more motivated, and I reduced costs. Implementing a paywall of sorts can hasten profitability.

Mistake #4: Offering Lengthy Free Trials

Free trials can seem enticing, but they often lead to non-committal users who don’t convert after the trial ends. To address this:

• Enhance Your Landing Page: A compelling landing page with clear value propositions can alleviate the need for a free trial.
• Offer Action-based Credits: Instead of a time-limited trial, give users limited actions (e.g., 10 emails) to explore before facing a paywall.
• Shorten Trial Periods: If implementing trials, consider reducing the duration to a week and require a credit card upfront.

Mistake #5: Pricing Too Cheap

Many developers undervalue their products, pricing them too low, which can devalue their perceived worth. Aim to price slightly above your estimation of value. For one-time payments, avoid prices below $19, and for subscriptions, stay above $5 per month. A higher price can enhance product perception and customer commitment.

Customers often equate higher prices with better value, increasing their engagement and resulting in profitability. Evaluate your competition to set your pricing within a reasonable range.

These pricing mistakes stem from my experiences with various businesses. Feel free to adapt these insights to your own journey. Ultimately, find a pricing strategy that resonates with your audience, helps you grow, and maintains the integrity of your product. Remember, the right pricing can propel your startup forward!

This article is not sponsored or affiliated with any products mentioned; my opinions are solely my own. Good luck, and until next time, just ship it!