Your First Price Is a Hypothesis. When Did You Last Test It?

How price discovery changes as you win customers, build repeatability, and grow.

Your first price is an educated guess.

You have a view of the value, some sense of the alternatives, and a customer you hope will say yes. You put a number in front of them and start learning. That is a reasonable place to begin.

The trouble comes when the company grows, the product changes, and the same guess becomes the pricing strategy.

Maybe you set the price to get your first reference customer. You decided to match a competitor because you needed somewhere to start. Or you agreed to a number in a negotiation and used it in the next proposal because, well, it worked last time.

Six months later, that decision is on your website, in your sales materials, and in your revenue forecast. It has acquired an authority that it may not deserve. The evidence has yet to be established. 

Pricing needs to develop with the business. What you need to learn from your first few customers is different from what you need to understand once you are hiring salespeople, supporting renewals, or selling through partners. 

Getting the first customers: Who will pay, for what, and on what terms?

Finding repeatability: Which customers buy for similar reasons, and which terms can you repeat?

Growing the business: Do the economics hold up as you add customers and hire people to support them?

Entering new markets: What carries over, and what needs a different package, price, or purchase model?

You may be doing more than one of these at once. An established company entering a new market still has discovery to do. 

Getting the first customers

Early on, I would put more weight on a real purchasing decision than on a conversation about what someone might be willing to pay.

Customer interviews and competitive research are useful preparation. But there is a difference between someone liking a proposed price and someone finding the budget, getting approval, and signing an agreement.

Give a prospective customer something specific to consider: a defined scope, a price, and terms you can deliver against. Then pay attention to what it takes to reach a decision.

If they agree, find out what made the purchase worthwhile. If they hesitate, understand what they are hesitating over. The price may be too high. They may also be uncertain about the result, the implementation, or their ability to get the purchase approved.

You also need to be honest about what you sold. An early customer may have bought the product along with direct access to the founders, custom work, and a level of attention you cannot offer indefinitely. That is a legitimate way to get started, provided you account for it when deciding what the deal tells you.

Keep a record of those details. The signed contract tells you what they paid. The work around it helps explain why.

Turning individual deals into an offer

After a few wins, you can start looking for patterns. Are similar customers buying for similar reasons? Can you sell roughly the same offer again? Does the price hold up when you remove the special arrangements?

This is where founder flexibility needs some discipline.

One account pays per user. Another has unlimited usage. A third received free implementation because you wanted the reference. Each agreement may have made sense at the time, but comparing them takes more than lining up the contract values.

Look at what each customer received, what they needed to make the decision, and what you conceded. Some differences will point toward useful segments or packages. Others will be leftovers from negotiations you would handle differently today.

Use that information to put a more consistent offer in front of the next set of comparable buyers. You need enough consistency to learn whether the package and price work across customers. Otherwise, every deal becomes another exception and the evidence remains difficult to interpret.

This is also a good time to examine your own discounting. Did the customer need a lower price to buy, or did you offer one to make an uncomfortable conversation easier?

Paying for the business you are building

A founder can make an early account work through effort that never appears in the delivery budget. You do the onboarding, answer the weekend question, and bring in the technical co-founder when something needs fixing.

As you grow, someone has to be hired to do that work. Pricing needs to support it.

By this point, you should have more than sales conversations to draw on. You can examine onboarding hours, support demands, usage, renewals, and expansion. Include the work that gets absorbed by senior people; it still has a cost even if nobody sends the customer an invoice for it.

Then revisit the expectations behind the model. If a low entry price was supposed to lead to expansion, are customers expanding? If implementation was supposed to become easier after the first few accounts, has it? If your largest customers get the best rates, does the volume make up for the additional work they require?

You may discover that a particular segment needs a different package, a minimum commitment, or a paid implementation. You may also discover that some business is difficult to serve profitably at a price the customer will accept. Better to understand that before you build a sales plan around winning more of it.

Entering a different market

A model that works for one buyer does not automatically travel well.

At Elipsa, pricing work covered our AI platform, automated tagging, and ChatN4, with purchase models for both end customers and systems integrators. An integrator incorporating your product into a project has to account for its own margin, delivery obligations, and relationship with the customer. That creates different requirements from an end customer buying a subscription for its own use.

Expansion brings those differences into view. A new segment might need different purchasing terms, support, or a different way to measure usage. A channel partner may need predictable costs before it can confidently include your product in a proposal.

Before creating another price list, establish which differences actually affect the purchase and the economics. Sometimes a change in packaging or terms is enough. Sometimes you need a different model. A new market deserves fresh discovery, even when the underlying product is familiar.

A few assumptions worth challenging

“Our early customers paid it, so we know the price works.” Look at what came with the purchase. Founder access, custom work, and unusually generous terms may have helped close the deal. Would the same price work for the offer you intend to sell going forward?

“We are winning every deal, so we have pricing right.” A strong close rate is welcome, but it leaves questions unanswered. You may have found the right buyers and a compelling offer. You may also be charging less than those buyers would comfortably pay. Look at margin, concessions, and how customers respond to the price before drawing a conclusion.

“We lost on price.” Sometimes you did. Other times, the customer never saw enough value to justify the purchase, or a competitor made a stronger case. Find out what the buyer chose and why before lowering the price for the next opportunity.

“A higher price will fix the economics.” It might help, provided customers see enough value to pay it. You may also need to address expensive onboarding, excessive customization, or a segment that costs too much to serve. Understand where the problem sits before expecting pricing to solve it.

“We raised a round, so it is time to raise prices.” A funding milestone says little about what a customer should pay. Changes in value, demand, delivery costs, or the customers you serve give you a more useful basis for the decision. The same applies to company age: being three years older does not, by itself, make the offer worth more.

Keep the testing deliberate

Revisiting pricing should start with a question you can investigate. Perhaps a segment values a capability enough to pay more for it. Perhaps the current package asks customers to commit too much before they have evidence. Perhaps your charging unit makes the bill difficult to predict.

Choose an assumption, define an offer, and decide what you will look for. Use customer conversations to understand the reasoning, purchasing decisions to test the commitment, and experience after the sale to assess whether the arrangement works for both sides.

Be careful with small samples. A higher close rate after a pricing change is encouraging, but customer fit, urgency, scope, and sales execution may have changed too. Keep enough context to make a fair judgment.

There is no need to redesign pricing every quarter. Customers and sales teams need an offer they can understand and rely on. But when the customer, product, delivery cost, or route to market changes, the assumptions behind your pricing deserve another look.

Your first price was based on what you knew at the time. You know more now.

What would you choose if you were setting it today?

If your business has moved on and your pricing has stayed where it started, I’d welcome a conversation. Visit levrist.com to learn more or get in touch.

What prompted you to revisit your pricing, and what did you learn? Share your experience in the comments. If this brings another founder or commercial leader to mind, pass it along.

Make moves that matter.

About Levrist

Levrist provides commercialization advisory for emerging and growth-stage technology companies, helping founders and leadership teams work through go-to-market strategy, pricing, strategic partnerships, and commercial execution.

If this raised a question about your own business, I’d welcome the conversation. Drop a comment or visit levrist.com to learn more and get in touch.

— Josh Boyle, Founder, Levrist