Higher B2B Prices Attract Quality

Anand Sanwal shares insights about pricing strategy in B2B businesses, drawing from his experience with CB Insights. He emphasizes that underpricing can attract problematic customers and hinder growth, while higher prices can signal quality and attract better clients.

Key Points:

• Initial Pricing Mistake:

  • Started CB Insights at $395/month
  • Attracted customers who didn't know how to use data
  • Got high-maintenance clients who churned quickly
  • Faced constant support requests from low-paying customers

• Price as Quality Indicator:

  • Management consulting firm advised adding "a couple zeros" to the price
  • Low prices can make your product look like a joke internally
  • Higher prices signal better quality beyond just core value
  • Customers don't want to wait behind low-paying clients for service

• Evolution of Pricing Strategy:

  • Moved from initial low pricing to "orders of magnitude higher"
  • Better customers came with higher prices
  • Improved operational efficiency with higher-value clients
  • Easier to start high and adjust down than start low and raise prices

• Learning from Experience:

  • People tend to underprice their products initially
  • Price is more than just about the core value
  • Higher prices can lead to better customer relationships
  • Pricing affects how seriously customers take your product

• Impact on Business:

  • Higher prices attracted more serious customers
  • Reduced support burden
  • Improved customer quality
  • Better positioned the company in the market