How to price a new product when you have no sales data

Three ways to set a price

There are three common starting points for pricing. Most good prices use all three as checks, with value as the anchor.

Value-based pricing in practice

Value-based pricing asks how much the product is worth to the buyer, then charges a fraction of that. If your tool saves a small firm roughly five hours of staff time a week, and that time costs them around 25 an hour, the illustrative value is about 125 a week, or over 500 a month. Charging 50 to 100 a month leaves the buyer clearly better off and still prices you well above cost.

The hard part is that buyers do not hand you this number. You estimate it from customer conversations: how long tasks take now, who does them, what errors cost, and what they currently pay for alternatives. Value is also perceived, not just calculated. A product that saves money but feels risky to adopt will be valued lower until trust is earned.

Cost-plus and competitor anchoring as checks

Cost-plus sets a floor. Work out the cost of serving one more customer, including hosting, payment fees, support time and any materials, and make sure your price leaves a margin after those costs. For software, costs per customer are often low, so cost-plus alone would badly underprice. For physical products and services, it matters far more.

Competitor anchoring tells you what the buyer already thinks is normal. If similar tools cost about 40 a month, a price of 200 needs a clear explanation, and a price of 5 may make buyers doubt the quality. Being cheapest is rarely a good position for a new company: it attracts the most price-sensitive customers and leaves no room for support or improvement.

Willingness-to-pay questions that work

Asking 'What would you pay for this?' produces unreliable answers, because people answer a hypothetical to be polite or to negotiate. Better questions ask about current behaviour and budgets.

• What do you spend on this problem today, including staff time? — Establishes the real reference point.
• Who would need to approve a purchase like this, and what is their usual limit? — Reveals budget thresholds that change the buying process.
• What did you pay for the last tool you bought for this kind of work? — Gives a concrete anchor from their own behaviour.
• At what price would this be so cheap you would doubt it? And so expensive you would not consider it? — A simple version of a price-sensitivity exercise that brackets an acceptable range.
• Would you pay for a pilot at this price now? — The only question that produces real evidence, because it asks for a commitment.

Designing tiers

Tiers let different buyers pay different amounts for different value. A common pattern is three tiers: an entry plan for small buyers, a main plan you expect most customers to choose, and a higher plan for larger buyers with more demanding needs.

Separate tiers by something that grows with the value the buyer gets: number of users, projects, locations, volume of transactions, or advanced features that larger customers need, such as permissions or reporting. Avoid splitting tiers by features that every buyer needs, which just frustrates people on the cheaper plan. Keep the number of tiers small at launch; you can add more once you understand who your customers are.

Testing prices before and after launch

• Pre-sales and pilots — Offer a paid pilot or pre-order at your intended price. Whether people pay is far better evidence than whether they say they would.
• Landing page variants — Show different prices to different visitors and measure sign-ups or checkout starts. Make sure the sample is large enough to trust the difference.
• Quote different prices in sales calls — For business products, vary the quoted price across similar prospects and track how many proceed.
• Watch the objections — If nobody ever objects to the price, it is probably too low. Some pushback is a healthy signal.

Raising prices

Pricing is not a one-off decision. Treat your launch price as a hypothesis, write down why you chose it, and set a review point after your first ten or twenty paying customers. By then you will know which tier people choose, which objections come up and which customers get the most value, all of which should shape the next version of your pricing.

Most new products launch underpriced because founders fear rejection. Raising prices later is normal and usually less painful than expected, especially if the product has improved since launch. A common approach is to raise prices for new customers first while keeping existing customers on their current price for a period, then give existing customers clear notice before any change.

Explain what has improved, give plenty of warning, and consider offering a discount for switching to annual billing before the increase. If a price rise causes a few low-value customers to leave while most stay, the business is usually healthier for it. Track churn closely in the months after a change so you can tell whether the new price is too high.

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