How to Price Your Product When You Have No Benchmarks

Most pricing advice assumes you have comparable products to anchor against. Look at what competitors charge, add or subtract 20 percent, done. But what if your product is genuinely new? Or the existing tools are nothing like yours?

This is where a lot of first-time founders freeze. They pick a round number, usually $29 or $49, and hope nobody notices the reasoning is thin. The problem is that price is a signal. A weak price signal confuses buyers and leaves money on the table.

Here's the thing. You do not need perfect benchmarks to set a decent starting price. You need a structured way to think about value, willingness to pay, and your cost floor. That's the whole exercise.

Alt text: Three pricing anchors with value-based pricing emphasized Caption: The three classic pricing anchors, and why value is the one that matters most.

The Van Westendorp method has been around since 1976 and is still used by pricing teams at real companies. It's four questions you ask 15 to 30 target customers:

1. At what price would this be so cheap you'd question the quality?
2. At what price would this feel like a bargain?
3. At what price would this start to feel expensive, but you'd still consider it?
4. At what price would it be too expensive to consider?

Plot the answers. The intersection of the "too cheap" curve and the "too expensive" curve gives you a rough acceptable range. The intersection of "bargain" and "expensive" is usually close to your optimal price point.

Is this scientific? Not perfectly. Is it better than picking $29 out of thin air? By a huge margin. And 30 conversations is a weekend of work, not a quarter.

If you have no direct competitors, your customers are still solving the problem somehow. Maybe with spreadsheets. Maybe with a virtual assistant. Maybe by not solving it at all and eating the cost.

Figure out what that current solution costs them, in real dollars and in time. A founder spending 6 hours a week on a messy spreadsheet at a notional $75 an hour is "paying" $1,950 a month in time. If your tool saves them most of those hours, you can price in the hundreds without flinching.

This is called the economic alternative. It's often the most honest benchmark you have when direct comparisons don't exist. Companies like Linear and Notion leaned hard into this when they launched, pricing against "the combined cost of 4 point tools plus the meetings to keep them in sync."

A common mistake is picking a dollar amount before deciding how the price scales. Should it be per user? Per project? Flat monthly? Usage based? Each model sends a different signal and captures value differently.

Here's a quick decision guide:

1. If your product gets more valuable with more users, consider per seat pricing.
2. If your product has high variable cost per use, consider usage or metered pricing.
3. If your product is used by small teams intermittently, consider flat tier pricing.
4. If your product replaces a service or outcome, consider outcome based pricing.
5. If your product has natural small, medium, and large buckets, consider good-better-best tiers.

Per seat feels safe but can punish you with teams that share one login. Usage pricing aligns with value but creates bill shock. Flat pricing is simple but caps your revenue. There's no perfect answer. Pick the model that matches how your customer actually experiences value.

Behavioral economics has one rule that matters for pricing: people evaluate prices relative to other prices, not in a vacuum. So give them a relative reference.

If your one product costs $79 a month, it just costs $79 a month. If you show a $199 pro tier, a $79 standard tier, and a $29 starter tier, the $79 tier suddenly looks reasonable. You didn't change anything about the product. You changed the context.

This isn't manipulation. It's clarity. Tiers tell buyers who the product is for. A solo founder sees the $29 tier and thinks "that's me." A 20 person team sees the $199 tier and thinks "that's us." Without anchors, everyone just sees a dollar amount and wonders if they're being overcharged.

One caution: don't invent a $999 enterprise tier nobody will buy just to make the middle look cheap. Sophisticated buyers smell that, and it cheapens the whole lineup.

All the research in the world can't replace a real conversation where someone says yes or no. So after you have a starting price, test it.

A simple way: line up 10 target customers, show them the product, and ask "this is $X a month, does that work for you?" Do not negotiate. Do not offer a discount. Just note who says yes, who says no, and why.

If 9 out of 10 say yes immediately, you are probably priced too low. If 9 out of 10 say no, you're too high or the value isn't landing. You want roughly 4 to 6 yes answers at your initial price. That's the sweet spot where you're capturing value without turning everyone away.

You can map this whole exercise out in a spreadsheet, a Notion template, or a planning tool like Foundra that walks first-time founders through the pricing decision step by step. The medium matters less than doing the work.

New founders underprice. Almost universally. The fix isn't getting the first number perfect. It's giving yourself permission to raise prices as you learn.

Build a simple plan: every 6 months, review your pricing. Look at churn, conversion, and the ratio of customers saying yes immediately versus haggling. If conversion is over 50 percent with no price pushback, raise prices 15 to 20 percent on new customers. Grandfather existing ones for a while if you want, then phase them to the new price.

Patrick Campbell at ProfitWell has shared data showing that companies that review pricing quarterly grow 2 to 4 times faster than companies that set pricing once and forget it. Pricing is a dial, not a plaque.

Pricing without benchmarks is not a guessing game. It's a structured process that beats gut feel every time.

1. Use Van Westendorp with 20 to 30 target customers to find a defensible range.
2. Benchmark against the economic alternative, not imaginary competitors.
3. Pick a pricing model that matches how customers experience value.
4. Use tiers to give buyers relative anchors, not tricks.
5. Test with 10 real customers before locking anything in.
6. Review and raise prices every 6 months as you learn.

How do I price if my product is free for now?

Even if you're not charging yet, run the Van Westendorp exercise. You'll know what people would pay, which tells you how much value they actually perceive. That number also informs when and how to start charging.

Should I offer an annual discount?

Usually yes, but start at 15 to 20 percent off, not 50. A large annual discount can feel like you're begging for cash flow. A modest discount rewards commitment without signaling weakness.

What if early customers say my price is too high?

Listen, but don't automatically cut. Ask what price would feel right, what value would justify the current price, and whether they're comparing to something specific. Often the real issue is that the value isn't clear, not that the price is wrong.

How is pricing different for B2B versus B2C?

B2B buyers care about ROI. They can handle higher prices if you show clear return. B2C buyers care about the monthly feel of the number. The same product might be $49 a month to consumers and $199 a seat to businesses. Different frames, different anchors.

When should I switch to usage based pricing?

Only when your cost to serve genuinely scales with usage, or when customers get wildly different value per dollar. Most SaaS tools should start with per seat or flat tiers. Usage pricing is operationally heavy and scares buyers who want predictable bills.

1. Van Westendorp Price Sensitivity Meter explained
2. The Anatomy of SaaS Pricing Strategy
3. Profitwell: Why Pricing Is the Fastest Way to Grow
4. a16z on pricing B2B software