Minimum Viable Product (MVP) pricing is the strategy you use to determine the cost of your product in its earliest, most essential form. It’s not just about picking a number; it’s about signaling your product’s value, targeting the right customers, and setting a foundation for future growth.

Getting this right is a balancing act. You want to attract early adopters without devaluing your work or creating problems for your future self. While it might be tempting to set a low price to reduce friction, this approach often creates more challenges than it solves.

Pricing an early-stage product is tough because you’re working with limited information. You likely have an incomplete picture of your ideal customer, the true value of the problem you solve, and the operational costs of delivering your solution at scale.

Founders often struggle with a few key challenges:

• Impulsive pricing: Setting a price based on gut feeling or a desire to simply get users in the door quickly.
• Competitor-based pricing: Copying a competitor’s price without understanding their business model, costs, or the specific value they offer.
• Fear of being “too expensive”: Under-pricing out of a lack of confidence, which can attract the wrong type of customer and signal low value.

Setting your price too low can feel like the safest option, but it comes with significant hidden costs that can slow your growth and even threaten your business’s long-term viability.

Here are a few reasons why “cheap” can be a dangerous strategy:

• It attracts the wrong customers: Low prices often attract users who are looking for a bargain, not a solution. These customers are typically less loyal, have higher support demands, and are the first to churn when a cheaper alternative appears.
• It sets a low anchor price: The first price customers see becomes their reference point. It’s much harder to double a price from $5 to $10 than it is to go from $50 to $55. A low initial price makes future increases feel drastic, leading to customer backlash.
• It erodes perceived value: Price is a powerful signal of quality. A product priced at $10 per month is perceived very differently from one priced at $100 per month. Underpricing can make potential customers question your product’s quality and effectiveness before they even sign up.
• It limits your revenue for reinvestment: Early revenue is the lifeblood of a startup. It funds product development, marketing, and hiring. A low price point means less cash to reinvest in building a better product and acquiring more customers, trapping you in a cycle of slow growth.

Instead of defaulting to the lowest possible price, a value-based approach is a more sustainable strategy. This method focuses on the value your product delivers to the customer rather than your internal costs or what competitors are doing.

Don’t try to be everything to everyone. Identify a small, specific group of early adopters who feel the pain of the problem you’re solving most acutely. These users are often willing to pay more for a solution that truly meets their needs because the alternative—doing nothing or using a clunky workaround—is more “expensive” for them in terms of time, effort, or lost opportunity.

Early adopters aren’t buying a list of features; they’re buying an outcome. Instead of counting up your features and assigning a price to each, quantify the value you provide. Does your product save them time? Increase their revenue? Reduce their risk?

Frame your pricing around that value. For example, instead of saying your product costs “$20/month for 5 features,” you might say it helps “businesses save an average of 10 hours per month.”

A common piece of advice from experienced founders is to price higher than what feels comfortable. This isn’t about being greedy; it’s about testing the market’s perception of your value.

• If you get a lot of sign-ups but high churn, your product might not be delivering on its promise.
• If you get pushback on price but customers still sign up, you’re likely in the right ballpark.
• If you get no sign-ups at all, your price might be a barrier, or your marketing isn’t effectively communicating your value.

An initial high price gives you room to experiment with discounts and promotions to learn what motivates buyers, which is much more difficult to do if you start too low.

The best way to understand how much your product is worth is to talk to the people you hope will buy it. Ask them directly:

• “How much would you expect to pay for a solution like this?”
• “At what price would this be so cheap you’d question its quality?”
• “At what price would this be too expensive for you to consider?”

Their answers will give you a realistic range and help you understand the perceived value of your solution.

Once you’ve settled on a pricing strategy, you need a system to implement it. A flexible billing platform allows you to test different models and adapt as you learn more about your customers.

Kinde’s billing engine is designed to help you manage your pricing and plans effectively. You can easily set up different pricing models, whether you’re charging a flat monthly fee, implementing usage-based tiers, or creating custom plans for different user segments. With Kinde, you can create and manage plans, and then use the API to connect them to your product for a seamless customer experience.

As your business grows, you can use Kinde to build and display pricing tables, manage subscriptions, and allow users to upgrade or downgrade their plans without manual intervention. This lets you focus on building your product while your billing infrastructure scales with you.

• Pricing models
• Build a pricing table
• About plans