Starter Story - The price is right

Hey,

This is Pat, founder of Starter Story — I wanted to give a warm welcome to the 816 people who joined us since our last newsletter. To anyone reading this, your support means a lot! I hope you enjoy reading our content as much as we enjoy creating it.

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And now, let's get a coffee and dive in: 

The price is right

From the news: Disney+ introduced a $3 a month rise (38%) and lost 2.4M.

Seems like a pretty bad result. But let’s run some quick numbers:

Before the rise, they had 164.2M subscribers paying $7.99/mo, which translates into $1.3B in monthly revenue. Almost $15.7B/year.

After increasing their prices and losing 2.4M subscribers, 161.8M people stayed, paying $10.99/mo. This means with the new pricing; they’re generating $1.7B per month. $21.3B/year.

Losing 6% of your customers but increasing revenue by 36% seems like a no-brainer move, right?

Then, why are founders often so afraid of charging more?

The main issue, I think, lies in entrepreneurs often making the mistake of underestimating their worth. 

It's easy to fall into the trap of thinking that charging less will attract more customers or will help with retention. But that's rarely the case.

In fact, pricing your product or service too low can actually make it appear less valuable to potential customers.

Example: These blades went from an $80 price tag to $800!

And they’re still generating similar revenue. But the solo founder works ten times less now. Not a bad deal.

Don’t be afraid to be labeled as expensive

Most online investment-related research services charge ~$10 per month or ~$100 per year.

But this founder was convinced that his newsletter was providing way more value than that, so he decided to charge $349 for a yearly subscription.

People thought that too because that newsletter generates $16K/month today.

See how much the competition charges

This solo founder and self-taught developer built a $360K/year AI content creation tool.

Checking out Facebook groups, he realized the #1 complaint people had of similar tools was how expensive the solutions in the market were.

So he set his tool at 80% of what the competition was charging.

Smart move.

Don’t make it confusing

Being clear and transparent with your pricing can play to your advantage.

3PLs are known for incredibly varied and confusing pricing models. 

These founders took the opposite route, making it transparent, easy to understand, and startup-friendly.

They went from broke college students to running a $1M/year business.

Keep experimenting

This subscription-based graphic design company played with different pricing models and strategies.

One test consisted in creating a 7-day free trial, no credit card required.

Result? 20-24% growth in monthly revenue.

Know what your customers need

This WordPress agency realized very few customers used the support service.

They started testing a pay-per-usage support service to reduce friction and offer fair pricing.

Result? 5x revenue increase. 

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Quick hitters

This founder makes $240K/year with a super niche gig. She went super niche… and still faced a highly saturated space. This is how she beat it: (1) strong brand, (2) productized service, and (3) added some cool products that were not common.

From getting fired to starting a $360K/year niche newsletter. After being laid off, he spent time working on something he was really passionate about: crypto. Today he has over 70K loyal subscribers and a super creative growth strategy (that you shouldn’t miss).

The living proof that you can monetize ANY skill. This guy makes $4K/mo as a credit card rewards expert. Learned all the ins and outs to his own benefit, but now he’s using all that knowledge to build a business that essentially cost $0 to start and run.