I spoke to Tim Leland about how he recently went full-time on his side project (you can listen to our whole conversation here).

At one point, he admitted that his product (a URL shortener) was priced lower than his competitors:

In the indie hacking community, these pricing memes get circulated frequently: "Charge more," "Don't compete on price," etc.

But pricing strategy requires a lot more nuance. Here's my response to Tim:

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Sometimes, a lower price is an advantage

When you're launching a new indie product, you typically have fewer features and no reputation. You have to give people a reason to try you out.

One way to attract customers is to lower prices so your product is more affordable than existing competitors.

˗ˏˋ Jesse Hanley ˎˊ˗ @jessethanley Hard agree. When you’re up and coming pricing is such a large leverage point when pulling customers from your competitors. By being competitive, people are more willing (in this market) to take a chance on you and invest time to migrate. https://twitter.com/mijustin/status/1671307750515826689 Justin Jackson @mijustin 🤔 Is it bad if your product is the cheapest? "One way to get people's attention with a new SaaS is to be more affordable than the incumbents." Here's a clip from the @buildyoursaas episode with @TimLeland. (Includes case studies: @ajlkn & @carrd, @mjwhansen & @Geocodio) 6:31 PM • Jun 20, 2023 1 Retweets 12 Likes Read 1 replies

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It's not the right strategy in every situation, but it's an underrated approach.

Of course, it's not enough to make your product the cheapest. You need to build a compelling product, offer excellent service, and give your customers recurring value.

Michele Hansen @mjwhansen @mijustin @buildyoursaas @TimLeland @ajlkn @carrd @Geocodio Great conversation! Agree there's a lot of nuance to "charge more" and that sometimes being affordable can be an advantage. In our case, being affordable isn't the only advantage, and we apply it in a "charge some people more" sense. Justin Jackson @mijustin 🤔 Is it bad if your product is the cheapest? "One way to get people's attention with a new SaaS is to be more affordable than the incumbents." Here's a clip from the @buildyoursaas episode with @TimLeland. (Includes case studies: @ajlkn & @carrd, @mjwhansen & @Geocodio) 1:53 AM • Jun 21, 2023 0 Retweets 1 Likes Read 2 replies

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Leave some money on the table

When discussing pricing, some gurus will encourage you to "maximize the revenue you capture from customers." Too often, this turns into blunt advice devoid of context: "You're only charging $29? You should raise your price to $79."

But price increases have way more risk than people think. It's not a decision to take lightly. As Jason Cohen said in this interview:

I got some private DMs related to this thread, where the founder said they raised prices, which initially increased revenue and profitability. But it was shortlived: customers were silently looking for more affordable solutions. Churn shot up, referrals tanked, and revenue began falling.

Again, Jason Cohen has a great quote about the benefits of leaving some money on the table:

If you're keen on this topic, I encourage you to read this piece I wrote back in 2019:

👉 "Should you always charge more?"​

Do you have any thoughts or questions? Hit reply, and let's chat about it.

Cheers,
Justin Jackson
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