The Biggest Founder Mistake Is Pricing Too Low

Founders' #1 mistake is pricing their product too low.

Having been in the Coding Bootcamp space, the closing of once high-flying Dev Bootcamp is fascinating:

Dev Bootcamp was charging a comprehensive 4-month program for $10,000. Knowing the economics of bootcamps, that was just too low to ever be profitable. You have so many costs and that's not nearly enough to cover them.

Why didn't they raise their prices? It's a mystery to me.

Marc Andreesen famously had this to say about startup pricing:

Tim Ferriss: If you could have one billboard, anywhere with anything on it, what would you put on it? If you wanted to convey a short message to as many people as possible.
Marc Andreessen: I’ve got one, I’ve actually thought about hiring a skywriter to do this one. Right in the heart of San Francisco would be a billboard with just two words on it: Raise Prices.
TF: Raise prices?
MA: Yes. The number one thing – just the theme and we see it everywhere – the number one theme with our companies have when they get really struggling is they are not charging enough for their product. It has become absolutely conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible under the theory that if it’s low-priced everybody can buy it and that’s how you get the volume. And we just see over and over and over again people failing with that because they get in the problem we call too hungry to eat. They don’t charge enough for their product to be able to afford the sales and marketing required to actually get anybody to buy it. And so they can’t afford to hire the sales rep to go sell the product. They can’t afford to buy the TV commercial, whatever it is. They cannot afford to go acquire the customers.

You can read that full interview here:

Show Comments