Go-to-market · 2026-10-31

Startup pricing and packaging: tiers, anchors, first increase

Price from buyer value: YC suggests 25–50% of it. Ship two or three tiers, a premium 50–100% above base, discounts that expire, and raise at renewal.

Set the price from the value your buyer gets, then package it as two or three tiers the buyer can sort themselves into. Tom Blomfield's Y Combinator talk puts the number at 25–50% of the value you deliver, so the customer keeps about two-thirds. Use your cost as the floor and aim for software margins of 80–90%. Put the enterprise features (single sign-on, audit logs, compliance reports) in the top tier and price it well above the rest. Kyle Poyar's 2026 survey of more than 230 software companies puts a premium edition at 50–100% above base. Show discounts as a dated line that expires. Plan the first price increase before you need it: McKinsey found that a 1% price rise, at steady volume, lifts operating profit about 8% for an average S&P 1500 company.

This page covers the price list: the number, the tiers, the discount rules, and the first increase. If you have not picked what you charge for (seats, usage, or outcomes), start with seat vs usage vs outcome pricing. For AI cost floors and overage, use how to price AI features. For the order form itself, use how to negotiate your first customer contract.

Set the number from a value equation

Blomfield's method has three inputs. Value comes first: time saved, cost removed, or revenue added, in the buyer's own numbers. Cost comes second and only sets a floor. Competition comes third, and his advice is to differentiate rather than match a lower price.

InputWhat to write downRule of thumbSource
Value to the buyerAnnual dollars saved or earned, agreed with the championCharge 25–50% of it; the buyer keeps about two-thirdsYC, Blomfield 2024
Your cost to serveModel, cloud, and support cost per customer per yearA floor only; aim for 80–90% gross marginYC, Blomfield 2024
CompetitorsWhat they charge and what they leave outDifferentiate on function; a price war takes the margin outYC, Blomfield 2024
Unknown valuePrices of other software this buyer already pays forStart there and raise 50% with each new pitch until you lose more than 25% of deals on price aloneYC, Blomfield 2024

Worked example from Blomfield's talk, illustrative and not data from any company:

LineAmount
Support team cost for the buyer$10M a year
Share of time your tool removes (agreed in the pilot)20%
Value to the buyer$2M a year
Your price at about a third$700k a year
Your cost to serve$200k a year

The pilot's job is to confirm the 20%. If it comes in at 15% or 25%, adjust the price to match.

McKinsey's partners wrote in 2003 that 80 to 90 percent of the poorly chosen prices they saw were too low. They also warned that the release price, minus discounts, sets the market's reference point for what the product is worth. A low first price is harder to fix than a high one.

Package two or three tiers

TierWho it servesWhat goes inPrice logic
Starter or teamA small team proving the productCore workflow, limited seats or usageLow enough for a manager to buy without a long approval
Growth or proThe buyer you sell to mostFull workflow, integrations, higher limitsThe tier you expect most to choose; the anchor for the others
EnterpriseSecurity and procurement-led buyersSSO, audit logs, SOC 2 reports, data residency, admin controlsContact sales or a high published floor; YC says up to 10×

Toolradar counted the tiers on 2,526 paid tools with public prices in May 2026. Three tiers was the most common shape at 34.9%, one tier was next at 19.0%, and only 10.8% published five or more. Its count excludes products with no public price, so it underweights enterprise software. There is no reliable public benchmark yet for tier structure or price-increase size at Seed to Series A.

Middle options gain share. Itamar Simonson's 1989 experiments found that a product's share was on average 17.5% larger when it sat as the middle option between two others, with significant differences in 9 of 11 cases. Use that by making the tier you want most buyers on the middle one, with a real top tier above it.

Poyar's 2026 survey found a premium edition usually priced 50–100% above the base edition, and named weak expansion revenue as the top monetization problem. A top tier with clear extras gives a growing customer a place to go. Early-stage companies under $5M ARR in the same survey leaned most toward flat fees, at 37% adoption.

The VEN (Venture Executive Network) session framing was to package the product in a unit the buyer already counts, such as a team, a location, or a block of usage, and to make overage cost a little more than buying the next block.

Discount on a dated line

McKinsey's advice for a new product was to protect the reference price. Free trials, samples, and early access for well-known customers let buyers try the product without lowering the price. Standard discounts and rebates do lower it, and buyers start to doubt the product.

DiscountWhat you get in returnWhen it ends
Design partner rateWeekly feedback, a case study, a reference callAt the first renewal
Annual prepayCash up front, a 12-month termRenews at the list rate
Multi-yearA longer termStated on the order form
Pilot priceA short test with a written success metricAt conversion to the annual plan

Blomfield prefers an annual contract with a 30-day or 60-day money-back guarantee over a long free pilot. Keep any pilot to two to four weeks with clear success criteria. The pilot to paid contract page covers the conversion terms.

Publish the price or ask buyers to talk to sales

Blomfield's case for "contact sales" on the top tier: enterprise value varies by customer, so one public number overprices some buyers and underprices others. Publish the starter and team prices so a buyer can compare without a call. The landing page page covers where the price goes on the site.

Check that the price can pay for the way you sell. Blomfield's rule of thumb is about 5:1 between new ARR a seller closes in a year and that seller's total pay. At a $100k total pay, a seller needs about $500k of new ARR. At $1,000 a year per customer, that is about 42 deals a month for one seller, a pace that fits an inside sales team.

Plan the first price increase

Poyar's 2026 survey found three in four companies changed pricing or packaging in the past year, so your buyers have seen price changes before. McKinsey's arithmetic is the reason to do it with care: for an average S&P 1500 company, a 1% price rise at steady volume lifts operating profit about 8%, and a 5% price cut needs about 18.7% more volume to break even.

StepWhat to doSource
Model it per accountOld bill, new bill, plan, and owner for each customer, plus revenue at riskPostHog handbook
Grandfather live customersAbout 2 months on a GA price change; about 1 month from beta to GAPostHog handbook
Allow lead timeAbout six weeks from first draft to launch dayPostHog handbook
State the increaseIf the price goes up, the email says so; managed accounts get a conversationPostHog handbook
Use the renewal dateA dated discount brings a customer back to list; escalator clauses now appear in 13% of contracts, down from 23% in 2024Common Paper 2026

Large vendors still raise on a schedule. Vendr reports Salesforce's standard annual uplift at 9%, negotiable to 5–7%. A startup gets further by pairing an increase with shipped value, such as a new module, a higher limit, or a new tier.

Not legal advice. Notice periods and renewal terms depend on your contracts; have counsel check price-change clauses before you send notices.

Set and raise your price

  1. Write the value equation. Dollars saved or earned for one buyer, agreed with their champion.
  2. Price at a share of it. Start at 25–50% of value and check that cost leaves 80–90% margin.
  3. Pick two or three tiers. Starter, the main tier most buyers choose, and enterprise.
  4. Gate enterprise needs. SSO, audit logs, compliance reports, and data residency go in the top tier.
  5. Price the premium. A top edition 50–100% above base gives growing customers somewhere to go.
  6. Choose a unit buyers count. Teams, locations, or usage blocks, with overage priced a little above the next block.
  7. Date each discount. List, discount, and net on separate lines, with what the discount buys and when it ends.
  8. Test the number on new pitches. Raise it until you lose more than 25% of deals on price alone.
  9. Check the sales math. About 5:1 new ARR to seller pay sets which sales motion the price supports.
  10. Raise at renewal. New customers first, then existing ones with notice and a grandfather window.

Mistakes that cost revenue

Cost-plus pricing. Blomfield says it always ends with underpricing. Cost is the floor.

A launch price set to win share. McKinsey found most poorly chosen prices were too low, and the first price becomes the market's reference.

Too many tiers. Toolradar found 10.8% of paid tools publish five or more tiers. A buyer who cannot tell tiers apart asks for a call or leaves.

Discounts with no end date. An open-ended discount becomes the price at renewal. Common Paper's data shows buyers strike automatic increases more often, so the dated line does the work.

Matching a cheaper competitor. Blomfield's example is the airline industry at 2.7% net margin. Differentiate on function, a niche, or integrations.

Raising on all customers at once with no notice. PostHog grandfathers live customers and models revenue at risk per account first.

Pair this page with the first customer contract for the order form and the AI gross margin calculator for the cost floor.

Sources

Founders who have set a first price list and raised it on live customers will pressure-test your tiers, discounts, and increase plan in a VEN session.

Go deeper: VEN playbook on pricing and packaging