How Should You Price Your Product? - 6/25/2026

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📰 Today's Edition: How Should You Price Your Product?

You just built your product. Now comes the question that makes every founder freeze: What do I charge?

Most founders agonize over finding the perfect price. They analyze competitors. They run surveys. They build complex spreadsheets with different scenarios.

And then they launch for free because they're terrified of getting it wrong.

I wish you could all just wave your magical horn like I do and do this: 

Should you cover your costs first?

Yes. Start here.

If you have manual onboarding costs, charge for your time. If running the product costs you money, make sure you're not losing cash on every customer.

This sounds obvious, but so many founders give away products that actively cost them money to deliver. They think they'll “make it up in volume” or “optimize later.”

In my hippocorn language, we call that going broke.

Your first pricing goal is simple: cover your costs. Then you can experiment from there.

Start with a price that feels slightly uncomfortable to say out loud. If you're totally comfortable with your price, it's probably too low.

Why is charging anything better than charging nothing?

Setting a price, any price, is a massive advantage over no price.

This is why paid pilots beat free pilots almost every time. Even if you're only charging a few dollars, that’s infinitely better than free.

Here’s what happens when someone pays, even a tiny amount: they go through the entire buying process. It becomes real. And they are forced to figure out if they value your product or service.

In contrast, anyone can say yes to something free. That's not a real test of how much people care about your product.

With skin in the game, customers are also more likely to give you direct, honest feedback on what's working and what isn't. This helps you improve faster.

With a free product, it's easy to be indifferent. Free pilots often lack engagement because there's no commitment from either side.

The customer feels no obligation to make it work, and they also feel weird criticizing something you gave them for free.

How do you avoid pricing complaints later?

Set expectations upfront. This is critical.

Whether you're selling to consumers or businesses, tell them: “This is special pricing for you as an early adopter, but only for a limited time.”

This gives you room to increase your price later without drama.

Another strategy is to grandfather existing customers into the old price for a long time and only increase it for new customers. This rewards loyalty while letting you capture more value from new users who haven’t experienced your pricing evolution.

The worst thing you can do is surprise customers with a price increase they didn’t see coming. That breeds resentment and churn.

Your first price is just a starting point. As you learn more about your customers, your costs, and your value, you’ll adjust.

The companies that succeed don’t find the perfect price on day one. They start with something reasonable, gather data, and iterate.

Should you worry about getting the timing of payments right?

t's not just about how much you charge. It's about when you get paid.

Upfront annual payment is usually best. Monthly is fine. Invoicing after all the work is done is the worst-case scenario.

If your cash flow can handle it, monthly can get you more customers initially. But if you need runway, annual is a huge lever to bring cash into your business now.

What if your industry doesn't typically pay upfront?

When you have a bit more scale, these days there are factoring services or invoice-based loans that can get you cash upfront even if your industry norm is to invoice after delivery. 

But ideally, you want to test whether your market will pay upfront for a year before assuming you need those solutions.

Often it’s in the framing. Membership programs charge annual fees upfront and people are used to paying that way. Can you frame your service or product as a membership?

Especially if you have any type of community attached to your product, that’s a membership. Position it that way and suddenly annual upfront payment feels natural.

Think about gyms, country clubs, and professional associations. They often charge annually upfront and nobody blinks. Even Costco, which is basically a grocery store, is a membership. 

What about payment failures?

If you go with monthly billing, be prepared for payment failures. They can add meaningful involuntary churn over time.

Failed payments are real. Credit cards expire. Banks flag charges. Customers forget to update their information.

This is another big advantage of annual upfront payment: one successful transaction versus twelve chances for something to go wrong.

Monthly billing also tends to generate a lot more billing-related support than annual billing. Your team will spend more time chasing down payment issues.

Regardless of which direction you choose, be prepared for payment failures. Have a simple recovery plan: automated retries, clear customer emails, and an easy way to update payment details.

Until next time,

Dunky, the “just charge something” hippocorn

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