Why startups should charge customers. A lot.

There’s a mistake many startups make (yours truly included) when they first start talking to customers: “yeah, we’re early stage so you can use it for free until we get out of beta”; or, “yeah, you’re a beta client so we’ll give you a big discount”. After all, there’s nothing wrong with getting pilot clients to prove your business, right? Um, wrong. The thing is that if you get customers used to the fact they get stuff for free, they’ll never want to spend a lot of money on it. And if you give them a discounted rate from the beginning, they’ll never want to pay more. It sucks. Of course, if your product’s like crack and gets them addicted instantly, by all means offer a free trial but for a very limited period of time.

We’ve been through this at Brainient. In order to prove that our business works, we went in and gave customers access to our platform at discounted rates. That worked well to get some proof of concept, but 12 months in we went back asking for more money and, surprise, surprise, they weren’t willing to pay much more. Main argument? “Well, if you could offer me this for that price, it means you’re just charging more to make better margin.”

So, next time you go speaking to customers – charge your full rates regardless what stage your company’s at (and prove the value of the product, by the way). It’s better to have them come back for discounts rather than you going to them asking for more money. Lesson learned.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s