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Business · 50 items · 3 min read

Easier Pricing

For one-person digital products. Format: easier > harder. The right price means fewer customers to find and fewer to support, and it makes the business worth running.

Sections
  1. Formulas
  2. Price level (1–12)
  3. Structure (13–25)
  4. Getting paid (26–37)
  5. Changing prices (38–50)

Formulas#

  • Customers needed = target yearly revenue ÷ yearly price. At $100k a year, that's 1,000 customers at $100, or 100 customers at $1,000.
  • Price ≈ 10–20% of the value you create. This is a rule of thumb.
  • Lifetime value = monthly price × margin ÷ monthly churn. The cost of getting a customer must stay well below it.
  • When expansion revenue beats churn, revenue grows even with no new customers. (Net revenue retention above 100%)

Price level (1–12)#

  1. Pricing for 1,000 true fans > pricing for a million users. (Kevin Kelly)
  2. Price anchored to value > price anchored to your costs.
  3. Price anchored to what they pay today > a guess.
  4. In the middle of competitors or above > below all of them.
  5. A price that covers support > a price that ignores it.
  6. A price you can say without flinching > an apologetic price.
  7. Starting high with early-user discounts > starting low and raising later.
  8. Round, simple numbers > complicated math.
  9. One currency to start > many.
  10. Business prices for business users > consumer prices.
  11. Raising the price when conversion is high > leaving it forever.
  12. Price as a positioning signal > price as an afterthought.

Structure (13–25)#

  1. Subscriptions for ongoing value, one-time for finished goods > forcing one model onto everything.
  2. Charging per unit of value (sites, seats, sends) > a flat price.
  3. Tiers split by who they're for > tiers split by random feature caps.
  4. A generous free tier only when free distribution pays for it > a free tier by default.
  5. Limits at natural growth points > arbitrary limits.
  6. Add-ons for special needs > a bloated base plan.
  7. Annual with 2 months free > odd discounts.
  8. A premium done-for-you tier > do-it-yourself only.
  9. A simple pricing page > a calculator.
  10. Public pricing > "contact us."
  11. A trial with a clear end > free forever by accident.
  12. Grandfathering loyal customers > forcing price hikes on them.
  13. A setup fee on high tiers > free hand-holding.

Getting paid (26–37)#

  1. A merchant of record > handling global tax yourself.
  2. Card payments > invoices.
  3. Automatic renewals > manual renewals.
  4. Reminder emails for failed payments > silently losing them.
  5. Annual prepay > monthly only.
  6. A clear refund policy > deciding case by case.
  7. Self-serve receipts and invoices > email requests.
  8. Local payment methods where volume justifies them > everywhere at once.
  9. A pause option > cancel only.
  10. A downgrade path > cancel only.
  11. Proration handled by the payment system > doing the math by hand.
  12. One payment system > several.

Changing prices (38–50)#

  1. New prices for new customers > surprises for existing ones.
  2. Announcing increases early > springing them.
  3. Explaining what they get > just posting a new number.
  4. Testing on new visitors > changing it for everyone.
  5. Small yearly increases > rare big jumps.
  6. Adding value when raising the price > raising it alone.
  7. Discounts with a reason (students, nonprofits, launch) > random discounts.
  8. Few discount codes > coupons everywhere, which teach people to wait.
  9. Measuring conversion and churn after a change > guessing.
  10. Letting customers lock in the old price with annual before an increase > just raising it.
  11. Raising prices as the product improves > raising them on a stale product.
  12. Watching refunds > ignoring them.
  13. Reviewing price every 6 months > setting it and forgetting it.

If you keep only 5: #1 (1,000 true fans), #3 (what they pay today), #14 (per unit of value), #26 (merchant of record), #38 (new prices for new customers).