Pricing Panic: Why Most Founders Are Doing It All Wrong (And How to Fix It)

Stop Playing Pricing Limbo—You Deserve Better Than a Race to the Bottom

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Today, we're tackling the business equivalent of a root canal: pricing your product or service.

One of the most common questions I get as a four-time founder is:

“What is the most challenging aspect of running a business?”

And I always say the same thing:

Pricing. Every damn time.

Heck, I even struggled with how to price the different tiers of this newsletter!

So, if you've ever had a conversation with Chat GPT about how you should price your product, this article is for you!

AI Isn’t Coming to Save You

I've consulted ChatGPT on pricing, too. Useless. It just regurgitates what everyone else is doing and parrots VC-friendly “expert” advice about the “standard” pricing models for SaaS (which I always view with deep skepticism).

Here's the thing: if you wanted to copy everyone else, you wouldn't have become an entrepreneur, would you?

So, when it comes to pricing, we agonize, we second-guess, we stalk competitors' websites, we ask the AI and we undercharge.

This chaotic approach has brutal consequences: when customers ask about your pricing, you can't defend it. I know from experience—it's embarrassing, it’s painful, and it kills deals.

So help me help you avoid this nightmare. All you have to do is read on and learn!

The Pricing Two-Step That Nobody Asked For

When we started Boardroom Insiders, pricing conversations always turned into an awkward dance. Picture this on repeat:

Customer: "What does your solution cost?"

Us: "What's your budget?"

Customer: "How much would you charge based on what I need?"

Us: "How much are you willing to spend?"

Customer: backs away slowly

We were stuck in analysis paralysis, overthinking everything instead of just picking a number and testing it. We were under immense pressure because we were bootstrapping and couldn't afford to leave a single dollar on the table. 

We spent more time obsessing over competitors' prices than understanding what our customers actually valued. We underpriced our product, and overcomplicated our tiers.  Looking back, it's a miracle we won any deals at all. 

Here’s what I’ve learned since: A simple approach—picking a defensible price and sticking with it and tweaking it gradually as needed—is the best path for your customers, which means it is also the best path for your business. 

The operative word here is defensible. More on that shortly.

Competitor-Based Pricing Makes Me Sad

Here's where most founders go wrong, according to pricing expert Etinosa Agbonlahor from Decision Alpha:

"They're charging $49… so we should charge $45."

That's not strategy, Agbonlahor says, that's anchoring. And it doesn’t serve your business, especially if you offer some kind of “secret sauce” that your competitor does not.

Why would you charge the same–or even undercut–the competition when your solution is better?

As she explains in her new podcast, The Pricing Minute, competitor pricing tells you absolutely nothing about what your customers are willing to pay for YOUR solution. You're essentially playing pricing limbo—how low can you go—instead of building a sustainable business.

The problematic truth: Most founders approach pricing backwards. They build a product, then scramble to figure out what to charge. Successful businesses do the opposite—they identify what customers will pay for, then build a product to match that value. This is why so many consultants evolve into successful SaaS CEOs. Their customers have already been paying them for years to solve problems manually. So they know exactly how much they are willing to pay for a more streamlined, digital solution.

The Three Pillars of Your Offer (Price is Only One of Them)

Your offer isn't just your price—it's three interconnected elements:

1. What you're delivering (your product or service)

2. How you're delivering it (your delivery mechanism)

3. How much it costs (your pricing model)

Change any one element, and you've created an entirely new offer. The magic happens when all three align perfectly. But here's the kicker: you're never "done." Your offer and pricing will evolve.

Pillar 1: What You're Delivering—Define Value, Not Features

At Boardroom Insiders, we thought we were selling executive profiles. Wrong. We were actually selling something far more valuable: the confidence to have strategic conversations with C-suite executives, without fear.

This revelation transformed everything. We stopped obsessing over database size and started emphasizing critical customer outcomes.

Your turn. Ask yourself:

• What problem am I solving?

• What outcome are customers trying to achieve?

• What would make this solution 10x more valuable?

Pillar 2: How You Deliver It—Format Is Everything

Delivery mechanisms dramatically impact perceived value. We started with PDF reports that customers loved but couldn't search or update. When we evolved to a searchable, filterable database with real-time updates, we could charge significantly more—not because the content improved, but because better delivery made it more valuable.

Consider these variations:

• Self-service vs. high-touch

• One-time vs. subscription

• Individual vs. team access

• Basic vs. premium features

Each creates a different value proposition and price point.

Pillar 3: How Much It Costs—The Psychology Game

Pricing isn't math—it's psychology. In our early days, we priced so low that customers were suspicious: "How good could this be for $10,000 a year?"

We lost deals because our pricing didn't match our promised value. But once we gained confidence and raised prices, something magical happened: higher prices attracted more serious customers who implemented our solution more effectively.

The counterintuitive truth: Premium pricing often increases demand by signaling quality and exclusivity.

Our Pricing Evolution: From Panic to Profit

Over 12 years, we went through too many pricing iterations to count. But I recall five distinct phases, each of which taught us something crucial:

Phase 1: The Desperate Dance

Custom quotes for everything. Customers confused, us exhausted.

Phase 2: The Competitor Copycat

Tiered pricing based on competitors, including a “retail” model that attracted credit card fraudsters. Race to the bottom and a brand new headache of dealing with fraud.

Phase 3: The Value-Based Awakening

Started pricing on our unique data set and white-glove service, which no one else had. ARR climbed and renewals stabilized.

Phase 4: The Defensible Model

Created a pricing formula based on real customer use cases. Customers understood our logic, even though we priced differently than the competition. Our pricing methodology became part of our differentiation story and helped us close Fortune 250 deals.

Phase 5: The Premium Player

We launched our second product, a true SaaS platform, based on customer feedback and demand. We closed more big enterprise deals, some reaching $350K annually. We reached $5M ARR and sold the company in 2022 for $25 million, or 5x revenue.

Each iteration wasn't just about charging more—it was about delivering more value that justified higher prices. Our premium positioning made us an attractive acquisition target for a company with more commoditized offerings.

The Bootstrapper's Pricing Playbook

Based on our hard-won experience and insights from pricing experts like Etinosa Agbonlahor, here's your action plan:

1. Start With Value-Based Pricing

Forget your costs for now. Know what your competitors are charging but don’t copy them–or worse, undercut them. Price based on the unique value of YOUR solution. Put a stake in the ground and make sure you can defend why your solution is unique or better. Your customers will expect this when you ask for their money. 

Come up with a simple, transparent, defensible formula: Capture 10-20% of the value you deliver. If your solution saves customers $100K–or makes them $100K–pricing at $10K-$20K is reasonable.

2. Use Anchor Pricing Like a Pro

This classic approach works because it guides customers toward your preferred option (usually the middle tier).

For example:

• Basic: Limited access ($15K)

• Professional: Full access with additional features and support ($25K-$50K) ← most choose this option

• Enterprise: Custom solutions ($75K+)

Adding a premium enterprise tier makes it easy for prospects to say yes to your middle while creating a natural upsell path. When we launched our second product, which was a major upgrade from our basic offering, more customers gravitated to our premium tier and our ARR soared.  

3. Test Price Increases With New Customers

Most bootstrapped companies are undercharging. We found that:

• Existing customers rarely complained about 10-25% increases, which we justified by showing them their usage data (YOU MUST HAVE THIS)

• New customers never knew the old prices anyway

If you remember only one thing from this article:

Higher prices attract serious customers who are committed to making your solution work. They become highly-engaged advocates who brag about their success from conference stages. This beats pitching from a sad little exhibit hall kiosk every time.

Storytime: When we scraped together $25K to send our team to the Sirius Decisions conference pre-pandemic, we were not sure of the value. But then one of our best customers mentioned us on the main stage and our little kiosk tucked away in the back corner of the exhibit hall was mobbed.  

When someone pays $50K instead of $5K, they can't afford failure. They assign dedicated team members, attend training religiously, plan strategic rollouts, and push through challenges that would make cheaper customers quit.

This creates a powerful flywheel: committed customers generate impressive outcomes, giving you success stories and ROI data to share with prospects. These assets help you close bigger deals at higher prices. Your customers become your best salespeople, referring colleagues and expanding usage. (Way better than inbound funnels, which I despise—but that's another topic.)

The psychology is simple: When customers invest significantly, they work harder to prove the value—both to themselves and their organizations. This turns pricing into a qualification tool that attracts the right customers while repelling tire-kickers who will drain your support resources without delivering meaningful outcomes.

Have Courage and Stay Strong!

The biggest pricing challenge isn't strategic—it's psychological. We fear rejection, worry about being "too expensive," or feel we're not "established enough" for premium rates.

Reality check: Every time we raised prices, I braced for a backlash that never came. Customers care about value and looking smart to their teams. Deliver that consistently, and they'll happily give you more budget.

Storytime: After the pandemic hit, one customer got a budget windfall from returned deposits for cancelled in-person events. I was the first person she called—on a Sunday: "I have $165K. I want to give it to you. What can you do with it?"

She knew her money was safe with us and that we'd deliver something insanely valuable, even during an unprecedented time.

I called our AE (only time I've ever called an employee on a Sunday) and we proposed a $125K deal that afternoon. We thought asking for the full $165K would look greedy.

Her reply: "I don't think you heard me. I have $165K, and I want to give you ALL of it."

The lesson: Be so valuable and easy to work with that customers want to give you their entire budget. ALL OF IT!

Just Like Your Product, Your Pricing Is Never “Done”

Your pricing should evolve as your product evolves, as you learn from customers, and as markets change.

Don't be afraid to experiment. The worst outcome? Customers say no—which is valuable feedback in and of itself. The best outcome? You discover untapped value that accelerates revenue and transforms your business.

Your Next Move

If you're struggling with pricing strategy, get expert help. Etinosa Agbonlahor's Profit Without Burnout workshop is designed for founders ready to reset their pricing with behavioral insights and real strategy (not competitor stalking). I learned about her from founder Anne-Mari Macridis at last week's Scaling With Soul office hours—thank you, Anne-Mari!

Note: I'm not getting paid for this recommendation.

Remember: Pricing isn't just about making money—it's about aligning what you deliver with what customers truly value. When you nail that alignment, pricing becomes a tool that drives both your success and theirs.

Stop playing pricing limbo. You and your business deserve better!

What questions do you have about the entrepreneurial journey? Email me at sharon@sharonkgillenwater.com and I might address them in a future issue or an office hours session (for paid subscribers only).

Q: I see a lot of founders “building in public” as a marketing strategy. I feel like it gives away too much to the competition. Can you share your thoughts?

A: This is the wrong thing to worry about.

Competitors will always try to copy you—your features, pricing, positioning—heck, they will even try and poach your team. You can’t stop them.

But copying your tactics isn’t the same as replicating your success. They don’t have your domain expertise, customer relationships, or obsessive focus on solving problems.

There are probably hundreds of people out there with your exact same idea. Most of them will never get off the couch and try. Those who do often give up early or fail along the way.

By building in public you are increasing your chance of success. You get real-time feedback, iterate faster, and build awareness and trust with future customers, partners, investors and supporters. That’s marketing gold you can’t buy.

Meanwhile your competitors are too busy with their own problems to execute well. And even if they try, most are missing the secret ingredient: genuinely caring about customers.

Story worrying about competitors copying you. Start obsessing about delighting customers. The trust and connections you build through transparency will always outweigh the risk of someone out-executing you on your own idea.

Got a question? Send it to sharon@sharonkgillenwater.com and it might be featured in next week's Reader Mailbag!

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