The question that ruins pricing research
'Would you pay for this?' is the most reliably misleading question in early-stage research, and it survives because the answer is so pleasant.
The person answering has no budget at stake, no procurement process in the room, and a social incentive to be encouraging. They are not lying. They are answering a hypothetical honestly, and a hypothetical honestly answered is still worth nothing.
The alternative isn't a cleverer version of the same question. It's looking for money that has already moved.
Four signals that actually predict payment
Any one of these beats a hundred enthusiastic yeses. Two of them and you have something worth pricing.
- —Prior spend — they have already paid for something in this category, even something bad.
- —Named budget — they can tell you which line it comes out of and who controls it.
- —Substitution — they are currently paying a person to do this manually, which is a price you can measure.
- —Escalation — the problem has been raised somewhere it costs political capital to raise things.
Questions that surface prior spend
- 1What have you bought to deal with this so far?
- 2What did that cost, roughly?
- 3Are you still paying for it? If not, what happened?
- 4Before that, what were you using?
- 5Who else in the business pays for something similar?
Questions that surface budget reality
- 1If you wanted this, whose budget would it come out of?
- 2What's the largest thing that budget has bought this year?
- 3What's the threshold above which someone else has to approve it?
- 4When does that budget get set, and when does it get spent?
- 5Who would have to be convinced, and what convinces them — a demo, a case, a number?
Pricing the manual substitute
Most early-stage problems are already being solved badly by a person. That person's time is your first real price anchor and it is far more defensible than a competitor comparison.
Ask how many hours a week the workaround takes and who does it. Multiply by a loaded rate for that role. You now have an annual cost of the status quo that came out of the customer's own mouth rather than your model.
The number is usually larger than founders expect and smaller than they'd like. Both facts are useful.
Commitment tests, in ascending order of proof
Anything below step three is interest. Steps four and five are momentum. Step six is the only one that is evidence of willingness to pay.
- 1They agree to a follow-up meeting with a colleague present.
- 2They send you an internal document without being chased.
- 3They introduce you to the budget holder.
- 4They ask you to send something they can circulate.
- 5They ask what the pricing is before you bring it up.
- 6They sign a letter of intent, a paid pilot, or a deposit.
How to say a number out loud
When it is time to test a price, state it as a fact rather than a question. 'It's four hundred a month per team' produces a reaction. 'What do you think it should cost?' produces a negotiation with someone who isn't buying yet.
Watch the reaction, not the words. A pause and a recalculation means it's in range. An immediate yes means you are cheap. An immediate no is the most useful answer you will get all week, because the follow-up — 'what would it need to do at that price?' — is where the real requirements live.
What a healthy pricing picture looks like
Across ten conversations you want: at least three people who have already spent money in the category, at least two who can name the budget line, and at least one who has asked you about price unprompted.
If you have none of those after ten conversations, the problem may be real and still not fundable. That is not a reason to stop, but it is a reason to change who you are talking to before you change what you are building.