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Joined 11 months ago
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Cake day: October 29th, 2023

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  • If you’re a software startup, it is a good idea to compete with your competitors on price, because the marginal cost of selling software is near zero.

    But there are diminishing returns on cheaper pricing.

    Like, let’s say you doubled your prices, so you cost 66% of your competitors’ price instead of the 33% now. 66% still leaves you significantly cheaper than your competitors. Who is going to pick your product at 33% price but not 66% price? Are there people out there who will be like “I will buy OP’s product at $33, but if OP’s product costs $66, I’d rather buy OP’s competitor’s product for $100 instead”?

    (That’s not a rhetorical question - if your competitors have a better product, or if they have more brand recognition than you, then maybe 33% price will get you a lot more customers than 66% price. But if you’re on relatively even footing with your competitors in terms of brand and features, then you’ll probably lose very few sales if you bump up from 33% to 66%)