You’re Charging Too Little (Here’s Why)

📈 The Psychology of Pricing: How to Charge More and Still Sell More

Why Most Startups Undervalue Themselves—And How to Fix It

💡 The $1,000 Coffee Experiment

Imagine walking into a coffee shop. You see two options on the menu:

☕ Regular Coffee – $2
☕ Exclusive Reserve Coffee – $1,000

Your brain instantly tells you:
❌ That $1,000 coffee must be a scam!
🤔 Wait, but… why is it so expensive?

Whether you realize it or not, your brain just ran a pricing psychology loop—one that affects every single buying decision you make.

And if you’re running a startup, it’s the same loop your customers run when they see your price.

The problem? Most founders price their product like the $2 coffee.

🔥 The Biggest Mistake Founders Make

🚨 If no one ever complains about your price, you're too cheap.

Startups—especially first-time founders—undervalue themselves ALL THE TIME. Why?

👉 Fear of losing customers – "If we charge more, they'll go somewhere else."
👉 Lack of confidence – "We're not good enough to charge premium yet."
👉 Comparison trap – "Other companies charge less, so we have to compete on price."

But here’s the paradox: Cheap prices don’t make people buy more. In fact, they often do the opposite.

📌 Example: In one study, wine drinkers were given two bottles—one priced at $10, the other at $90.

Same exact wine. Different prices.

Result? People rated the $90 wine as superior—just because it was expensive.

💡 Lesson: Higher prices create perceived value. Low prices destroy it.

🧠 The Psychology of Pricing: How Customers Actually Think

Your customers don’t just pay for a product. They pay for a story.

Here’s how different pricing changes the perception of your startup:

💰 Cheap pricing = "Must be low quality."
💰 Mid-range pricing = "This is normal."
💰 Premium pricing = "This must be the best."

Your job as a founder? Position yourself as premium—even if you’re just starting out.

🎯 The Three Psychological Pricing Strategies That Work

1️⃣ The "Goldilocks" Effect: Give Three Pricing Tiers

Ever noticed how most SaaS startups have three pricing options?

🔹 Basic – $49/mo
🔹 Pro – $99/mo
🔹 Enterprise – $299/mo

This isn’t random. It’s pricing psychology.

📌 People naturally avoid extremes—so most customers pick the middle option.

If you only have one price, you’re leaving money on the table.

2️⃣ The “Pain of Paying” Hack: Reduce Price Friction

Customers hate feeling like they’re losing money.

Here’s how you make them feel less pain when buying:

✅ Anchor pricing – Show a high price first, then reveal your "discounted" price.
✅ Monthly billing instead of yearly – $99/mo feels easier than $1,188/year.
✅ Decoy pricing – Show a useless option just to make the next one look better.

3️⃣ The “Premium Perception” Strategy: Price Higher from Day One

🚨 Underpricing is the hardest mistake to fix.

If you start cheap, it’s almost impossible to raise prices later. Instead:

🔥 Start at a premium price, then offer discounts if needed.
🔥 Frame your product as exclusive, not “affordable.”
🔥 Create FOMO by limiting access: “Only 100 spots available.”

🏆 Real-World Examples of Smart Pricing

📍 Apple: Same iPhone, but $999 feels premium—while $499 feels like a “budget” option.
📍 Tesla: Instead of competing on price, they built status into their brand.
📍 Notion: Gave their product away to students (free users), then upsold teams on premium plans.

🚀 The Bottom Line

Your startup is worth more than you think.

If your customers never hesitate at your price… you’re too cheap.

✅ Raise your price.
✅ Use psychology to shape perception.
✅ Position yourself as premium—because people don’t buy what’s best, they buy what feels best.

See you in your inbox,
— The WanderYak Team 🐂💨