Pricing is a common question that comes up with first-time entrepreneurs. My preference is being on the expensive side rather than the cheap side so that the product is viewed as a premium offering, more money is available to provide the best experience, and to have some pricing flexibility in special deals (it’s always easier to offer a lower price than it is to offer a higher price when negotiating a deal).
Here are a few examples where the product is more expensive and why:
- Pardot is more expensive than many of it’s SMB competitors because we believed in providing the best product and service possible at the $1,000/month price point, and this resulted in extensively staffing up our engineering and services team ahead of our sales team, contrary to what our competitors did
- The Atlanta Tech Village is viewed as an expensive coworking space (thanks Lisa for the comment), compared to others in town, because our goal is to be the best available, so we’re in a Class A midrise building with 12′ ceilings, free food and drink, fiber internet (~$40,000/year), a top-of-the-line Meraki wifi network (~$70,000 up-front), and more
- Tesla’s first car, the Roadster, was an expensive $100,000+ sports car, based on a Lotus, used to prove an all-electric car could be great, and pave the way for progressively building more affordable cars
Better, faster, cheaper — pick two — is a common saying for entrepreneurs. I prefer the first two and not the third. Expensive is better than cheaper when it comes to pricing.
What else? What are your thoughts on being more expensive, all things equal, for pricing?