2 builders who never spoke to each other

Pick the price zone and accept the business it makes

Each price band forces a different company around it. A dollar a month funds neither support nor marketing, ten dollars reads as budget while buyers still expect a human, around a hundred a month makes a couple of hundred customers comfortable, and enterprise rates mean a sales team. Choose the band deliberately and early, because it decides what the product has to be long before anyone builds it.

The method

1. 01

   Around one hundred dollars a month is the best zone for a bootstrapped business: the market is still broad, a couple hundred customers makes you comfortably profitable, and the margin funds acquisition.

2. 02

   At roughly a dollar a month you can fund neither support nor marketing, so the product has to be simple enough to run itself and has to spread through use or through loud early fans.

3. 03

   At roughly ten dollars a month you are read as the budget option yet buyers still expect a human on the phone, and bootstrapping only pays off at a scale that takes about a decade to reach.

4. 04

   Set the price early rather than treating it as a detail to settle after the product is built, because the number you pick decides what the product has to be and how the company around it must be structured.

5. 05

   Decide deliberately whether you are selling to thousands of customers cheaply or to a few thousand at enterprise prices, because both routes reach the same revenue by opposite means.

What it returned

• 200

  He puts the profitable customer count at roughly 200 to 300, and says the price zone is almost entirely B2B unless the product is a luxury item.

• 8,000

  It takes more than 8,000 customers to reach $1m a year at that price; shared hosting companies took roughly ten years to reach tens of millions.

• $390.6M

  Yext turned over $390.6M from just 2,700 customers, up 15% year on year. Ahrefs passed $100M a year with 90 employees serving more than 50,000 customers, and Semrush reached $293M from around 94,000.

• Cohen notes the technology behind it also has to be near enough free to operate at that price.

Sources

• The $122Bn SEO Industry: 32 Success Stories (with Revenue Numbers) for 2024 - Detailed.comGlen Allsopp · detailed.com · Yext – $390.6M Annual Revenue · 2023-01-23
• Pricing determines your business modelJason Cohen · longform.asmartbear.com · Pricing determines your business model · 2014-11-05
• Digging in to the Open Startups List - Tyler TringasTyler Tringas · tylertringas.com · Average revenue per user (ARPU) and Pricing strategy · 2015-04-24