You're underpricing because you're afraid to charge
Higher prices attract better customers who churn less. Superhuman charges $30/mo for email. Basecamp charges $349/mo. Both win.
When to use
You suspect you're undercharging. Your customers tell you the product is a bargain. You have low conversion and high churn from price-sensitive users.
Hypothesis template
If we raise prices to [$X] and position on [value/outcome], revenue will increase because higher prices attract committed customers and reduce churn.
Method
The problem: You're charging $9/month because you're scared users will leave if you charge more. You look at competitors' free tiers and race to the bottom. Your revenue barely covers costs.
What Superhuman did: Launched at $30/month for an email client when Gmail is free. No free tier. No trial without a personal onboarding call. They positioned on "the fastest email experience ever made" and attracted users who value their time.
The result: Superhuman reached $100M+ ARR. Basecamp charges $349/mo flat when competitors charge per-seat. Both companies found that higher prices attract customers who: use the product more, churn less, need less support, and evangelize more.
How to do it:
- Stop comparing to competitors' prices—compare to the value you deliver
- Calculate the ROI: if your tool saves 5 hours/month and their time is worth $50/hour, $30/month is a steal
- Raise prices for new customers first (grandfather existing users if you want)
- Add positioning that justifies the price: "for professionals who..." or "the fastest way to..."
- Remove the cheapest tier if it attracts users who never convert
- Monitor churn—often it goes DOWN after a price increase because you attract more serious users
Key insight: Cheap attracts price-sensitive customers who churn at the first alternative. Premium attracts value-driven customers who stay because your product saves them time or money. Your price is a signal.
Success metrics
- •Revenue per user
- •Churn rate (before vs. after)
- •Customer lifetime value
- •Support tickets per user
- •Conversion rate at new price point
Prerequisites
- A product that genuinely delivers value
- Confidence in your value proposition
- Metrics to prove ROI for users
Common pitfalls
- •Raising prices without improving positioning
- •Not grandfathering existing customers
- •Raising too aggressively at once (test 20-50% increases)
- •No value story to justify the new price
Source: Superhuman. $30/mo for email, $100M+ ARR. Higher prices, better customers.
Suggested ICE scores
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