1 minute reading time (178 words)

Pricing lessons from startups


First Round Capital's Tyler Gaffney talks about B2B startup pricing, from the point of view of running a VC which has funded over 30 companies:

When it comes to your first paying customers, these folks represent much more than income and validation of your early work. Each of these, Gaffney points out, is an invaluable data point. "If you're trying to get your first ten, or even 50 customers, you don't have many swings — but there's room for a some experimentation. Make the most of pricing conversations by setting a clear hypothesis," says Gaffney. "Let's say you've started a new workplace collaboration app, and you believe you can charge $30,000 ACV [annual contract value] for customers that have more than 1,000 end users. Deliver this price through conversation with the next five prospects who fit this demographic. Then, gather their feedback. If they're adverse to the price, ask open-ended questions that expose the root causes of their anxiety, and then re-evaluate.

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