Should You Charge from Day One? Unpacking Will Stevenson’s Pricing Strategy for Startups
Hey GTM teams, ever found yourself scratching your head over whether to slap a price tag on your product from the get-go or offer it for free initially? Well, you’re not alone. Let’s dive into this conundrum with insights from Will Stevenson, co-founder of onboard.io.
Who’s Will Stevenson
Before we dive in, let’s set the stage. Will Stevenson is an entrepreneur and one of the brains behind onboard.io, a platform designed to streamline and automate the customer onboarding process. He’s been in the trenches, navigated the startup world, and come out the other side with some golden nuggets of wisdom.
The Pricing Puzzle: To Charge or Not to Charge
One of those nuggets revolves around pricing.
Picture this: Will and his team initially launched their product for free, hoping to attract users with zero entry barriers. But they noticed a curious pattern. Without a price tag, customers didn’t value or use the product as much. So, they made a small change by introducing a small price tag. The result? A significant increase in customer engagement and perceived value.
At this point, you might be wondering, “But haven’t Product-Led Growth (PLG) models been hugely successful without charging upfront?” Absolutely, they have. So, why does Stevenson advocate for a minimal price from the beginning? Let’s delve deeper into this paradox.
How friction can help qualify the leads
PLG models aim to reduce friction to encourage usage. But Stevenson’s experience suggests that a certain level of friction—in this case, a price tag—can actually increase engagement. It seems that when customers invest in a product, even minimally, they are more likely to value it and engage with it.
But there’s another factor at play here: the qualification factor. This minimal price tag also helps you in qualifying your users. You’re ensuring that the people using your product see its value and are willing to pay for it.
Knowing Yourself: The Secret Weapon of Successful Startups
One of the key insights that Will Stevenson shared during the podcast is the importance of self-awareness. Working in the fast-paced world of startups, knowing your strengths and weaknesses can be a game-changer. It allows you to leverage your strengths and seek help or improvement in areas where you’re not as strong.
For example, if you’re great at product development but struggle with marketing, knowing this about yourself can help you seek out a co-founder or team members who excel in those areas. This leads us to the next point.
Assembling Your Dream Team: More Than Just Skills
Stevenson also emphasized the significance of team building and co-founder selection. He shared his experience of building a team with people he had previously worked with, which can be a great strategy. Working with people you already know and trust can save time and avoid potential conflicts down the line.
Take the example of Google’s founders, Larry Page and Sergey Brin. They met at Stanford and built a strong working relationship before starting Google. Their shared vision and complementary skills were key to Google’s success.
Staying Ahead of the Curve: Why Situational Awareness Matters
In addition to self-awareness, Stevenson highlighted the importance of situational awareness. This means being aware of what’s happening in your industry, staying on top of trends, and understanding how these factors could impact your business.
For example, if a new technology emerges that could make your product obsolete, being aware of this allows you to pivot or adapt your product before it’s too late. Companies like Netflix and Adobe have successfully navigated such shifts by staying aware of industry trends and adapting accordingly.
Key Takeaways and TL;DR
Before we wrap up, let’s recap some key takeaways:
- Self-awareness is crucial: Knowing your strengths and weaknesses allows you to leverage your skills and seek help where needed.
- Team building is key: Building a team with people you trust can save time and avoid potential conflicts.
- Situational awareness is important: Staying on top of industry trends allows you to pivot or adapt your product as needed.
Wrapping Up: Turning Insights into Action
In conclusion, the wisdom shared by Will Stevenson during the Hyperengage podcast goes beyond just pricing strategies. It delves into the heart of what makes a startup successful: knowing yourself, assembling the right team, and staying aware of the changing landscape of your industry.
These insights remind us that while pricing is a crucial aspect of a product’s success, it’s just one piece of the puzzle. The human elements – self-awareness, team dynamics, and adaptability – are equally, if not more, important.
Remember, the key to success is not just knowing, but doing. Let’s take these lessons from Will and apply them to our own strategies. After all, every startup and every market is unique, and the best strategy is the one that works for you and your team.
