Epstein: Startups should only discount for feedback, logos, lock-in, or renewals
Aaron Epstein · Startup Business Models and Pricing | Startup School · Y Combinator · Dec 15, 2022 · at 25:44
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Y Combinator Group Partner Aaron Epstein explains how early-stage startup founders should handle customer pricing pushback and when discounting makes strategic sense.
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“There's a third option too, which is you could give a lower price in exchange for one of four key things. One, you could give a lower price in exchange for your first user. If you're just looking for initial feedback and getting somebody on the platform, totally reasonable to give a lower price for that. Or, if you're talking to a valuable customer that has a recognizable logo, that can be another good scenario where you would give a lower price. You can then use this logo that you get As social proof to get other customers onto your platform at your regular price. Also, if your product builds lock-in, say by getting customer data on your platform that they would lose if they leave, that can be another reason to offer a lower price. And if you're able to renew after the first year and bump your customers up to that higher price, that can be a good reason to get people in at the lower price because you know you can capture more value from them further down the road.”
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