The $5/Month Trap
A common mistake is pricing a product at $5 or $9 a month on the theory that "at $5, anyone will buy it without thinking."
Low prices have real costs:
- Support takes as much of your time for a $5 customer as for a $50 one.
- The arithmetic is unforgiving. At $5 a month, $5,000 a month in revenue needs 1,000 paying customers. At $50, it needs 100.
- A very low price can make a business tool look like a toy.
If you solve a real business problem, test higher prices than feel comfortable. The pricing calculator shows how many customers each price needs to reach your goal.
Freemium vs Reverse Trials vs Free
Pure freemium can be hard for an early bootstrapper: free users still cost storage, bandwidth and support time. Alternatives to consider:
- A reverse trial: give every new user the full paid tier for a set period, such as 14 days, with no credit card. At the end, move them to a limited free tier unless they subscribe.
- A free utility: offer a small tool (a calculator or checklist) that needs no login, with a clear path to the paid product.
Picking the Right Value Metric
A value metric ties your price to how much value the customer gets. Common ones:
- Per seat or user: suits team collaboration software.
- Usage (API requests, emails sent, contacts stored): suits developer infrastructure.
- Feature tiers: Basic, Pro and Agency, for example.
Pick the metric your customers already think in. If they talk about "how many clients I manage", price by clients, not by seats.
Upfront Annual Plans
Offering two months free on an annual plan ($290 a year instead of $29 a month, which would be $348) brings cash in upfront. Ten annual subscribers pay you $2,900 at once, which can extend your runway without debt or giving up equity. Use the MRR calculator to see how annual plans affect your monthly numbers.
Should You Ever Offer Lifetime Deals?
Use lifetime deals only as a deliberate, capped experiment (for example, "the first 25 customers get lifetime access for $99"). Avoid uncapped lifetime deals on products with ongoing costs per user, such as LLM API calls or video storage: every lifetime customer keeps costing you money after they stop paying.