When there is no obvious competitor to copy, you price a software product by anchoring to the value it creates for a specific customer, not to what the market charges for something vaguely similar. That means identifying the clearest measurable outcome your product produces, finding out what that outcome is already worth to your buyer, and setting a price that sits comfortably below that value while still feeling serious. Everything else, tiers, trials, annual discounts, is secondary to getting that foundational logic right first.
Why 'look at what competitors charge' falls apart for novel products
Most SaaS pricing advice starts with a competitive benchmarking exercise. Go find three or four products in your space, average their prices, and position somewhere in that range. It is reasonable advice when you are building a payroll tool or a project management app. When you are building something that does not have a clear category yet, it is actively misleading. You end up pricing against the wrong thing entirely, which either leaves substantial revenue on the table or prices you out before you have had a chance to prove value.
I have shipped enough products across enough different problem spaces to know that the founders who get this wrong are usually not lazy. They are just using the wrong starting point. The question is not what do similar tools cost? It is what is this specific outcome worth to this specific buyer?
The working method: six steps
- Name the outcome, not the feature. Before you touch a pricing page, write one sentence that describes the clearest, most measurable result your product produces. Not 'automates your workflow' but 'cuts the time your ops team spends on X from four hours a week to under thirty minutes.' If you cannot write that sentence, your pricing problem is actually a positioning problem in disguise.
- Find the economic value of that outcome. Talk to five to ten potential buyers and ask a direct question: what does it cost you right now, in time, money, or missed opportunity, when this problem is not solved? You are not asking what they would pay for your product. You are asking what the status quo costs. This is the most important conversation you will have before launch, and most founders skip it.
- Identify who feels that pain most acutely. The same problem has wildly different economic weight depending on who has it. A freelance consultant losing two hours a week to manual reporting feels it differently from an agency losing two hours per client per week across forty clients. Your initial price should reflect the buyer segment where the pain is heaviest and most concrete, not the broadest possible market.
- Set an anchor price at roughly ten to twenty percent of the annual value you deliver. This is a heuristic, not a rule, but it is a useful gut-check. If your product saves a buyer roughly £12,000 a year in avoided costs or recovered time, a price anywhere from £1,200 to £2,400 per year is defensible. Below that range, you are probably undercharging. Above it, you need a much stronger proof of value before anyone signs.
- State the price to real humans before you build a pricing page. In early conversations with prospective buyers, say the number out loud, or put it in an email, and watch what happens. Silence followed by a question about how to sign up is a green light. An immediate 'that seems expensive' without any follow-up questions usually means the value is not landing yet, not necessarily that the price is wrong. The distinction matters.
- Build in a deliberate review point. Set a specific date, three or six months post-launch, where you will revisit the price based on actual conversion data, churn signals, and the quality of customers you are attracting. Pricing is not a one-time decision. The founders who treat it as permanent lock themselves into whatever guess they made on day one.
The two mistakes that kill early pricing decisions
Pricing for validation instead of value
A very common pattern: a founder sets a low price because they want people to sign up, treats the signups as validation, and then discovers that cheap customers are the hardest customers. They churn faster, demand more support, and give feedback shaped by the fact that they were price-sensitive to begin with, which is rarely the feedback you need at an early stage. Low prices do not de-risk a product; they attract the wrong risk.
Using per-seat pricing when value does not scale with seats
Per-seat pricing makes obvious sense when more users means more value delivered. It makes much less sense when your product produces a fixed outcome regardless of how many people touch it. If the value is in the output, not the usage, a flat or outcome-based structure will almost always capture more revenue and feel fairer to the buyer. Defaulting to per-seat because every other SaaS does it is a structural mistake you will spend years trying to undo.
What to do when buyers cannot articulate value in numbers
Some of the most valuable problems are hard to quantify directly. If your buyer says 'it just makes things less stressful' or 'we would sleep better at night,' that is not a dead end. It means you are probably solving a risk problem rather than an efficiency problem, and risk has a price too. Ask what it would cost them if the problem you are solving actually happened in its worst-case form. That often gives you a floor for the value conversation. Insurance products live entirely in this space, and they charge accordingly.
If a prospect tells you a price feels high, the most useful follow-up question is: 'compared to what?' The answer tells you what frame of reference they are using, which is often not the one you intended. You can then correct it or decide the segment is not the right fit.
On free tiers and trials
Free tiers and trials are distribution mechanisms, not pricing strategies. They answer the question 'how do people experience the product before paying?' not 'what should the product cost?' Conflating the two leads to products that are permanently half-free because the founder was never confident enough in the value to charge for it clearly. If you are using a free tier, design it so that the upgrade trigger is obvious and tied directly to the value moment you identified in step one. A free tier that lets people live in it indefinitely without ever hitting the paid value is a lead generation tool that generates the wrong kind of leads.
A note on bootstrapped products specifically
If you are bootstrapped, your pricing decisions carry more weight than they do for a funded startup. You do not have runway to absorb the cost of sustained underpricing. A funded business can spend eighteen months at the wrong price, learn, and adjust. A bootstrapped product needs to generate real cash from real customers much sooner. That is not a reason to rush or guess, but it is a reason to front-load the value conversations described above and to resist the temptation to price low 'just to get started.' Getting one customer at the right price teaches you more than getting ten customers at a price that does not reflect the actual value you deliver.
| Pricing signal | What it usually means | What to do |
|---|---|---|
| Prospects ask lots of questions but do not object to the price | Value is landing; friction is elsewhere (trust, onboarding, timing) | Focus on reducing non-price friction |
| Prospects immediately say it is expensive and disengage | Value is not landing, or you are talking to the wrong segment | Revisit the outcome framing, not the price |
| Prospects sign up but churn early | Price may be low enough that commitment is low too | Consider raising price and improving onboarding simultaneously |
| You are closing nearly everyone you speak to | Classic underpricing signal | Raise the price until you are closing roughly sixty to eighty percent |
That last row is worth sitting with. A close rate of one hundred percent sounds like success. In practice it usually means you have set a price so low that the buyer feels no friction at all, which also means they feel no commitment. Pricing is partly a filter. The right price filters in buyers who genuinely need the outcome and filters out people who signed up because it felt cheap to try.
How do I price a software product with no direct competitors?
Anchor to the economic value your product creates for a specific buyer segment rather than to competitor pricing. Identify the clearest measurable outcome, quantify what that outcome is worth to your target customer, and price at a fraction of that value. The ten-to-twenty percent of annual delivered value heuristic is a useful starting point.
Should I start with a low price to attract early customers?
Not by default. Low prices attract price-sensitive customers, who are often the hardest to retain and the least useful for early product feedback. A better approach is to find buyers who feel the pain acutely, charge a price that reflects real value, and treat those early relationships as a true signal of product-market fit.
What pricing model works best for a novel SaaS product?
The model should reflect how value is actually delivered. Per-seat pricing works when more users means more value. Flat or outcome-based pricing works when the product produces a fixed result regardless of usage. Defaulting to per-seat because it is conventional often means leaving revenue on the table or creating a structure that feels unfair to buyers.
When should I revisit my software pricing after launch?
Set a specific review date before you launch, typically three to six months in. Use conversion rate, churn rate, and the quality of customers you are attracting as your primary signals. A close rate close to one hundred percent and low churn suggests underpricing. Rapid churn after short trials often suggests a mismatch between price expectation and perceived value.
How do I handle a prospect who says my software is too expensive?
Ask 'compared to what?' That single question surfaces the frame of reference they are using, which is often not the one you intended. If they are comparing to a free tool or a vaguely similar product at a lower price point, you can either reframe the value or decide they are not the right segment. Do not automatically lower the price; diagnose first.