The final market positioning topic I want to touch on is pricing. This is one area where I see tons of founders struggling—usually because they don’t understand the true value of their product.
Every transaction is an exchange of value. You get money, the user gets… something. Typically, founders have a vague idea of what that something is, but it isn’t particularly useful. As a result, they set prices based on shaky experiments, competitors who are also unsure, or gut feelings.
The approach I recommend is value-based pricing.To dive deeper into this concept, consider my SaaS Pricing Guide
, which provides extensive insights and strategies for pricing your SaaS product effectively.
I have my clients calculate the exact
economic value of their product. This is the amount your ICP is currently spending to solve their problems without you. For example, if your SaaS helps businesses automate document processing, calculate the cost for manual document processing.
Enterprise users don’t choose products that save them $50 to $100 per month—they look for solutions that save them tens or even hundreds of thousands. Don’t be afraid to ask them to pay what your product is really worth. For more specific strategies tailored to larger businesses, check out our detailed guide on Enterprise SaaS Pricing.Factors that add to this number include:
- Revenue growth
- Labor savings (e.g., not needing to hire, pay, and train additional staff)
- Overhead reductions (e.g., fewer physical office spaces)
- Increased customer retention
Some of these can be tricky to calculate, but it’s well worth the effort. I like to tell the story of one founder I worked with who was charging $100,000 for an annual license in the biotech niche. When we worked out how much his solution was actually
saving his customers in terms of time and money, it turned out to be a saving of $6 to $20 million.
With that kind of savings, a $500,000 annual price tag doesn’t seem unreasonable.