2:53Most Startups Are Undercharging - Dalton Caldwell
From Y Combinator · Published Jul 22, 2019 · Watch on YouTube
TL;DR
Most startups undercharge by 10x to 100x of what they should. Competing on price yields bad data about product–market fit because you attract only price-sensitive customers. Successful companies (Instacart, DoorDash, Airbnb, Dropbox, Zapier) charge a premium, not a discount, relative to alternatives. The core advice is to dramatically increase prices as fast as possible.
Key insights
- Undercharging is extremely common; startups often charge one-tenth or one-hundredth of the appropriate price.
- Competing on price is dangerous because it masks whether the product actually solves a real problem — you may only be winning customers who want the cheapest option.
- A good, successful product usually charges a premium over competitors, not a discount, because it solves a huge problem that customers will happily pay more for.
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