4 tips from Austin startups on how to price your product

by Colin Morris
October 26, 2015
The Mattr.co team at a team building retreat
For entrepreneurs, choosing what to charge for their product or service can be especially tough. Even with market research, it’s hard to put a dollar value on the blood, sweat and tears you’ve invested in launching your business.
We asked three leaders in Austin tech to share their best advice for getting it right. Here are the top four tips.

4. Follow through on marketing

There are all kinds of ways to get your name out there, but the best approach tends to be the most authentic. A great way to make lasting connections with your prospects is establishing your brand as an authority in areas that matter to them through content marketing like a blog or YouTube series, and by sponsoring events they actually want to attend.
But if you choose that route, don’t forget to have a plan in place for staying in touch with the audience you capture.
Eric Tarlo (pictured right), sales director at the web design company SpaceCraft, said it’s critical to have a clear call to action for that audience, and a way to keep in touch with them.
SpaceCraft once hosted a workshop to attract users. The event was well attended, but afterward, Tarlo said the engagement with attendees dropped off.
“We captured their info, but we really didn’t segment it enough to act on the people who could have told their friends,” he said. “Make sure you have analytics and a way to understand what’s happening from a marketing perspective.”

3. Don’t give away more than you have to

When you’re hungry for new customers, it’s tempting to sweeten the deal for them. As new e-commerce platforms make it easier to offer and track promo codes and free trials, many startups begin by giving a lot away.

That may work if you’re targeting consumers, but Mattr CEO Jack Holt (pictured left) doesn’t see an advantage for his business.
“For B2B, never give anything away,” he said. “No free pilots, no free trial, never.”
His reasoning is that you rarely enter a B2B deal at the level of the person who has the final say.
“If you agree to a free trial with them, there's an extremely small chance you'll get a deal because your non-buyer probably didn't get buy-in from the person who'll pay you.”
For ObjectRocket co-founder Chris Lalonde (pictured below), free trials are more of a gray area.
“It comes down to knowing the value of a customer to your business and the costs associated with supporting that customer,” he said. “You need to know that value relationship.”

2. Leave room to fail

Of course, there’s nothing wrong with experimenting. Holt added that finding a fit for your product in the market is a series of iterations, just like making software. That means not being afraid to fail.

“You have to expect to fail,” he said. “Not only do you, the founder, have to expect this going into the cycle, you must prepare your co-founders and employees.”
And when those failures happen, you should be ready to change your strategy in a way customers will like. Lalonde said that's a great time to have some wiggle room built into your pricing.
“It's always easier to lower a price than it is to raise it,” he said. “Large customers will expect to negotiate price, so leave yourself room.”

1. Keep it simple

You’ve probably heard this before as you’ve perfected your product pitch. It’s hard for anyone to get excited about something they don’t understand, and even harder to justify spending money on it.
Lalonde said a non-technical person should be able to read your pricing page and explain it back to you.
“It's the ‘Mom test,’” he said. “If my mom can tell me what she thinks she'd pay, then I feel pretty comfortable.”
Your customers will usually tell you if your pricing is out of line, either through words or actions. But if you follow this advice, communicating your market and leaving yourself room to adapt, you should be able to find your place in the market.
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