How to think about pricing your product

TLDR

The timing of pricing decisions might matter more than the prices themselves. Hear from Hex’s Barry McCardel about when to start pricing discussions and how to structure your early approach.
Early-stage founders spend countless hours debating pricing strategies, running scenarios and worrying about leaving money on the table. But at Hex, we learned this effort is usually premature. Most young companies haven't even validated that customers will use their product, let alone pay for it.

The pressure to figure out pricing comes from everywhere. Investors want to see revenue projections, comparison spreadsheets need numbers and potential customers ask for pricing in every meeting. But focusing on pricing too early can actually slow down the more important work of finding product-market fit (PMF).

Validate first, price later

There's a simple rule for early-stage pricing decisions: If you're still validating whether people will use your product, it’s too early to stress about how much they'll pay for it. 

The right moment for pricing discussions is when customers are actually using the product consistently. Before that point, complex pricing models are just elaborate guesswork. Save your energy for finding PMF — pricing optimization can wait.

Key considerations for early-stage pricing once you have PMF

Choose your pricing metric

The simplest approach often works best for early customers: Use a fixed price for at least the first year. People often worry about renewals and future pricing structure, but that complexity can wait.

Early pricing should focus on getting started with customers who want to use your product.

Set clear expectations with placeholder pricing

Send a straightforward email to your early customers documenting your current pricing approach. This email should acknowledge that you're still developing your model while establishing clear terms for your working relationship.

For example: "While we're still finalizing our long-term pricing strategy, here's what we propose for the first year. At renewal, we'll discuss adjustments based on the value you've received and our updated pricing model."

Find the right timing

Many founders swing from one extreme to another — either rushing to set prices too early or avoiding pricing discussions indefinitely. The right moment sits between these extremes. 

Here’s my take on timing: Once you know the thing you're doing, go do that thing. When you see users consistently using your product, and you’re clearly delivering value, it's time to establish your initial pricing structure, even if it's just a placeholder.

The stress-free pricing guide for founders

Successful early-stage pricing requires both patience and decisiveness. Wait for PMF, but then move quickly to establish your baseline pricing. Getting this sequence right helps you focus energy on what matters most at each stage of building your company.

Here's what to remember about early-stage pricing:
  • Don't think about pricing before customers are actively using your product.
  • After PMF, start with a simple fixed price for your first year.
  • Send clear documentation of temporary pricing agreements.
  • Move on to more firm pricing once you see consistent product usage.
  • Keep early pricing focused on learning, not maximizing your revenue.
Suggested
Next
Have any ideas or suggestions to improve this article?