Lenny Rachitsky shares a story of a seller who raised prices from $300/year to $300/month and saw no drop in signups. Low prices signal low value. Higher prices attract better customers who expect to pay more.
Questions this video answers
2026-01-27T12:01:03Z
$300 per year
$300 per month
12x
One or two per week
Chapters
I once talked to a guy, he had a product that he was selling essentially to enterprise and government. To me, way too cheap. He said something like, Yeah, I charged $300, like $300 a month. That's not enough. He goes, no, per year. I said okay, how many signups do you get a week? And he's like one or two. I said, okay, just for fun, just change it from per year to per month. So in other words, we're 12xing the price. He did and he still got one or two per week. Nothing changed. I'm like what are you going to do next? And he goes, oh my gosh. Well now I have so much more money and profit, so I'm going to hire an engineer, I'm going to do this marketing and I'm like timeout. What you're going to do is raise prices again. You12 the price and nothing observable changed. That means you're not near the price yet. So why does this happen? The reason is that pricing selects the market. If you only think of the market as people with very limited budgets barely can do anything, not getting much value out of it, then it is true that if you raise prices, you'll get fewer of them. But think about just even a mid sized company, forget about enterprise, just think about a company with a thousand employees and 400 million in revenue or whatever. If they see a product that's $2 a month or even $100 a month, the thought is like that can't be good enough. They're not mature enough. It's not going to do enough. They just won't buy. They're not in the market for the thing.
