How To Price For B2B | Startup School

[@chapterme]

Chapters (Powered by ChapterMe) - 00:00 - Intro: B2B pricing tips for founders 01:19 - The Value equation for customer satisfaction 04:15 - Value equation and other elements in pricing 04:28 - Cost and margins in software pricing 05:57 - Investing in low-cost LLMs risks land grab 06:26 - Competiton: Value equation, pricing, differentiation 08:03 - Ask champion: How do you pay for software? 08:17 - Essential pricing tips for successful sales 10:08 - Publishing or contact sales for pricing decisions? 10:25 - Value-based pricing for enterprise customers 11:42 - Pricing strategy dictates sales channels 13:42 - Free trials or Pilots? 14:08 - Push customers to sign up for annual contracts, play strengths as startup 16:42 - B2B pricing summary recap: Value, cost, and differentiation strategies for successful pricing 17:30 - Outro

[@ahmednawaz4723]

How come this comment is two week ago?

[@chapterme]

@@ahmednawaz4723 The video was created 2 weeks back but was unlisted until yesterday!

[@VolodymyrLisivka]

@@ahmednawaz4723 Video scheduled for release 2 weeks ago.

[@chapterme]

@@ahmednawaz4723 YC is our customer and this video was unlisted 2 weeks back and was made public recently.

[@craciunescuandrei93]

I visited my first customer in Germany today, a multi-billion dollar company, and I applied all the things from the video in the meeting. It worked better than expected, especially the value equation. I just asked about the fair value for the product. Thanks, YC, and perfect timing for me! Best regards, Andrei (RiskCube AI)

[@junaidahmad4321]

Hlo bro please contact for me

[@stanly19981005]

This is gold! The most comprehensive SaaS pricing breakdown from YC so far

[@rubncarmona]

What I love about this narrative is that it not only teaches me a task with immediately practical tips, it also really improves the quality of the concept of successful product in my mind

[@rugbyf0rlife]

Absolutely phenomenal.advice. my competitors have priced their SaaS really cheaply and I struggled at the start with how to price. I eventually decided just to offer more features and quality and charge double, differentiating myself as "the premium, all-in-one solution."

[@KlaasVictor]

15:04 Pick a number, try to sell, increase pricing as you go. Got it!🙏🏼

[@YordanGeorgiev]

Man , you should have published this video 2 years ago ! I learned through swet and tears 80% of it in my biz . Now working on the rest 20% ... Thank you !

[@moslanguagechannel1499]

Cool. Thank you for this video, Tom and YC! Looking forward to watching the B2C version soon!

[@mvegaarance]

Amazing how you condense so many incredible insights into such a simple explanation.

[@colbr6733]

Really useful, particularly to those of us who tend to be focused on the technology side.

[@LDacic]

Feels like the underlying assumption here is that our Champion is on our side. I'm sure it happens sometimes, but for most of us doing B2B sales legwork, the Champion (if we can even call him that) is totally on the prospect's side. Fishing around and trying to maximize our margins isn't a welcomed and encouraged endeavour.

[@renaudaxeleba9061]

Thank you very much Tom, and to YC. This video provided gold advice.

[@theindubitable]

Unlimited greatfulness for these very useful insight. Thank you YCombinator!!

[@shucaroline5784]

Very useful! Especially impressed by the increase by 50% each time approach

[@george_davituri]

interesting tips, the ways to define product price. also great quote 'instead of getting into a pricing war with competitor rather better try to differentiate your product'

[@terrymcchesney383]

Tom, this gave me a lot of great things to consider with pricing. Thank you! Great job

[@mxpf26]

Awesome video! Helped me think different about the current enterprise pricing, I was way underpricing before.

[@susan908]

This is one of the best I've need on this topic. Will be watching again (and taking notes)

[@Nonpardon]

😂

[@codewithfongoh]

Thank you YC, this is soooooo nice. Your contents are top notch.

[@testblablabla1]

Early stage startup shouldn’t be selling $700K enterprise software. Enterprise doesn’t just buy the product, they buy support, training, customization, and stability of the product, early stage startup can’t provide that. Start with lower market then go up from there.

[@jawandsingh1464]

I have been looking for this information for last 2 weeks. Thanks much ❤

[@lyovazi8533]

This is incredible set of advises.Thank you for publishing it.

[@amiranvarov]

Can we have more of such videos ? :) It was brilliant!

[@OldemiroAmericoBaloi]

This video came in the right moment, I was struggling with this because need to send a proposal for POC 🎉🎉🎉🎉

[@wakeschoolgt8336]

Beautifully enriching content!!! Thank you YC ✨

[@GabrielSestrem]

That’s hard to achieve. Enterprise customers hardly ever will buy from you on a ROI 3. They are seeking ROI 10. Too much risk for just 3x on return. They are looking for 10x. So, if you are bringing 1.5M on savings, you will charge 150k or maximum 250k on ROI 6. That’s from my experience. You can aim for ROI 3 if you are very predictable and you have a huge reputation. Not for an early stage startup.

[@DisruptedSinner]

Great video. This is exactly what I needed right now. In the video, it gets a bit confusing sometimes when you're on a roll and just throwing out numbers without specifying if they're meant to be MRR or ARR. Other than that, this information will be extremely helpful in the months to come.

[@felipelimacosta]

Ao much knowledge in such a short time, congratulations

[@CreatrixDesignandInnovation]

That's pretty cool thank you, it would be nice to learn about the projection for pricing in the long term when you start to scale up.

[@mahdi5796]

Excellent video. Please upload more of such content.

[@Latfaye199]

Great video, quite useful and tailored advice. Quite what I needed atm.

[@itsmasabdi]

This was amazing, very much needed!

[@pianokidfromcolombia]

This was a great video. Thanks again YC!

[@hsng1]

Thank you for the B2B sales videos!

[@ruans.p.5323]

Timely video, thanks

[@flo2867]

Awesome video, thanks so much, super helpful! 🙏 I'd have one question: When in the process should one reveal the pricing to the client? I understand you suggest right after the forecasted value equation (esp. when already signing the deal with the 60/90 day money-back guarantee), but that is before the experimental validation. What do you think about postponing giving a number til the experimental validation comes in to not over- or underprice? If so, what do you suggest saying about pricing before experimental validation? For instance, do you suggest providing a relative/absolute range?

[@ZK_33]

Thanks Tom, you pricing advice are always gold! A maybe naive question, but I'd love to have your take on it. The product is a hot tech topic with a couple of existing players. 2 are doing well but for this particular product, they sell it for free via cloud, and very cheap via API (certainly not 90% margin). Customer discovery says they'd love to pay for something more scalable, more up to date in performance, and which streamlines the complex tech but with a couple of improvements in UX and quality of output. Is it crazy to try to win the differentiation game against free competitors, at least with what appears to be incremental improvements? The alternative is sacrificing this usecase to do something more niche, but that's a pitty because product 1 is a great data acquisition opportunity to bump the performance of usecase 2. Thanks for the advice!

[@prathamnotorious8685]

awesome! just pure gold

[@iamkaransethi]

Remarkable points, Tom. Noted.

[@atharva__shukla]

Absolutely amazing!

[@kasperborup8683]

Excellent video. I have a question. Do you apply the same principles and thoughts to hardware companies or do you think differently about that?

[@dmitrys8887]

Tom, thank you for such a concise video. My question what to do with clients who for years are using the product but for very small price. Should we renegotiate the contract and increase the price or it's better not to do anything with them?

[@BriceLee-h9e]

First of all thank you for your insigth! A quick question to ask: if our solution creates values in both revenue generating (by increasing the leads) and cost reducing (by reducing the resource allocation of marketing team), which one should I weight more for the value equiation? Is it better to mix both? or just focus on one of the two to highlight our value proposition more?

[@BrianFernandez-Dili]

Amped up after watching this!!

[@Ahiless]

great video, thanks!

[@fil_liv]

Very interesting Tom. Thanks for sharing. I have one question about the value equation: you mentioned that you need to clearly define the equation with your champion and then charge roughly 1/3 of the value the clients receive. Do you disclose this directly to the champion (i.e. "you keep 2/3 and we keep 1/3"), or do you just present it as a price (in your example $ 700k)? If you choose the latter and later find that the value they get after the pilot is much higher, how would you go about raising the price then?

[@christhornham]

Very helpful. Thank you.

[@michelsonthe9th]

In my personal experience with B2B sales as a startup, you always underprice out of fear of losing deals, which ends up biting you back.

[@golammostafaamit3946]

Why does it bite you back?

[@atharva__shukla]

Helped a lot

[@MrPsvkrishna]

Please share similar video for B2C pricing strategies, if there is any.

[@drunklovegiraffe2102]

I love u, this solve me many problems

[@dmitrys8887]

Another question, any tips on how to negotiate the validation? In most cases big clients don't want their logon on the homepage of the products they use.

[@Ben-eu8dz]

Is there a benefit in pricing relating to cost now that AI is having more impact on the ability to reduce operations cost? Say the product is aimed at SMBs, with the goal being to obtain a high volume of these customers and largely keep them to a zero to very low touch, then does it make sense to set prices at "no brainer" levels and have those dictated largely by costs?

[@Dr.Kananga]

Thank you, this is good insight.

[@mogaleboshoga1185]

Can you also make another one in pricing for B2C?

[@prathamnotorious8685]

Waiting for the B2C version

[@avadh10]

Please let me know how we should price the hard tech product prizing .

[@Cygx]

Can you expand more about what you mean by losing 25% of your customers to competitors? we should keep lowering our prices until we only lose 25% to our competitors?

[@Tiberiusdinu1031]

Hello, YC solo applicant over here. Semi-technical and business founder building a brain-science based startup. I have built my website + MVP. I can cover product long-term and help with the front-end. Looking for a technical co-founder applying for the Winter '25 batch. Anyone interested?

[@zzzggg388]

What do you do when a prospect emails you what is the price so we can decide if we want to try it or not?

[@Zeee530]

Try giving them a short trial, if they see value then discuss how much it's saving for them and apply the 70/30 rule

[@Romanticoneable]

What about overpricing the software, say 5x and then ask the user how much can they actually pay for? What if the user does not pay for any software, or the ones they use are free and you are coming with a paid option that solves their issues?

[@Razaminivlog786]

❤ amezing idea 💡❤

[@AbraarAnifaSaitbai]

GOAT

[@Hastingsnow]

Thank you!

[@kasforai]

Great example as I'm trying to sell AI voice agent. Maybe I can apply this for teams under 50 employees

[@pink_fluffy_sky]

If the value I bring is $50.000 per month and my competitors sell their service for $2.000, how do I decide the price?

[@WPaKFamily]

You can start by typing it as $50,000 and $2,000 instead of $50 and $2 with too many zeros for no reason. Thanks.

[@666lumberjack]

Are these customers already paying your competitor 2k/month to save this 50k? If not, why not, is your product better/able to server customers they can't?

[@sysarcher]

If you're an SMB and just a smaller version of competition, idk if there's much you can do except be competitive. If you're a startup and have a differentiator, you can probably price like the video suggests.

[@siddhantsingh3411]

​@@WPaKFamily Decimals and commas work differently in different cultures.

[@WPaKFamily]

@@siddhantsingh3411 Doesn't mean that they are correct or right.

[@emmanuelben1393]

How do you price your service if your business model is transactional ?

[@stephydeng9959]

what if the traditional pricing in the industry is by comission

[@eduardOi_iO]

🔥🔥🔥

[@Nonpardon]

Ship it for free and make the world a better place…

[@HaydenHelin]

Cool

[@SirManselus-w9u]

What are the best strategies to protect my portfolio? I've heard that a downturn will devastate the financial market, so I'm concerned about my $200k stock portfolio..

[@user-zq1mp1zm3k]

There are strategies that could be put in place for solid gains regardless of economy situation, but such execution is usually carried out by an investment specialist

[@Stephanie-n9c]

I've been in touch with a financial analyst ever since I started investing. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders

[@chi-q6u]

Mind if I ask you to recommend this particular coach you using their service? Seems you've figured it all out.

[@Stephanie-n9c]

My CFA ’ANGELA LYNN SCHILLING’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.

[@chi-q6u]

I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.

[@testblablabla1]

Early stage startup shouldn’t be selling $700K enterprise software. Enterprise doesn’t just buy the product, they buy support, training, customization, and stability of the product, early stage startup can’t provide that. Start with lower market then go up from there.