# Pricing Lessons from Working with 30+ Seed and Series A B2B Startups

As CEO of Entrepid Partners and First Round's Sales Expert in Residence, Gaffney works directly with founders and early sales teams to establish go-to-market strategies and growth plans. Here he shares his pricing principles and experiments so early-stage teams can generate foundational revenue.

Though he’s nearly seen it all, **[Tyler Gaffney](https://www.linkedin.com/in/tylergaffney/?ref=review.firstround.com)** still gets surprised when early-stage B2B startups tell him how they’ve determined their pricing. The common thread? Many tend to make pricing decisions largely in a vacuum and dangerously removed from a broader go-to-market strategy. This is a natural approach, because early-stage companies often lack the resources — the brand recognition, troves of customer data, pricing experts crunching scenarios, or runway to execute — but it can turn into a big problem, especially when you consider how pricing can play an instrumental role in going to market.

As First Round Capital’s Sales Expert in Residence, Gaffney has a unique perspective on how early-stage B2B pricing and go-to-market strategy takes shape, having worked with 30+ Seed or Series A-stage startups over the last two years. He knows how the pieces must eventually fit together, having taken [WePay](https://go.wepay.com/?ref=review.firstround.com) from 0 to $50M in revenue and sold big medical equipment at GE. Now as the CEO of **[Entrepid Partners](https://www.entrepidpartners.com/?ref=review.firstround.com)**, Gaffney’s made his name by helping early-stage B2B startups drive revenue.

In this exclusive interview, Gaffney gives early-stage founders of B2B startups a better sense of where to start, and demystifies the complexity around pricing experimentation by walking through his most fundamental pricing principles. Read on to learn what missteps to avoid, early experiments to run, how to frame your price to early customers, mitigate their concerns along the way, and where to look to find the answers to many of the hardest pricing questions.

## MAJOR PITFALLS TO SIDESTEP WITH B2B PRICING

Gaffney is a firm believer that pricing is more art than science for early-stage B2B startups. **Mistakes he says B2B startups commit over and over again:**
- **Mistake #1: Prices are conjured without customers.**
- **Mistake #2: Prices are set in stone, not in motion.**
- **Mistake #3: The price is too low.**
- **Mistake #4: The pricing structure is overengineered.**

> Speaking to customers about pricing can be stressful. But I promise you that not talking to them and attempting to interpret their silence is more excruciating.

## WHERE AND HOW TO START WITH B2B PRICING

Startups must maximize their learning per conversation around pricing. Gaffney recommends zooming out first to their goals around a [go-to-market strategy](https://review.firstround.com/leslies-compass-a-framework-for-go-to-market-strategy/). Each of these goals has a different optimization, often at the cost of another.

When it comes to your _first_ paying customers, these folks represent much more than income and validation of your early work. Each of these, Gaffney points out, is an invaluable data point.

## What To Have At The Ready Before Speaking with a Potential Customer

For early-stage startups, **these pricing tests don’t require a ton of data points to become actionable.** Gaffney recommends different customer development questions to ask, depending on where you are with your pricing experiments. Here are a few of his key questions:
- What is the last software solution you bought? Tell me about that evaluation process.
- If I told you that I have a solution to \[insert pain point\], would you be interested? Why?
- What do you think is an acceptable price for a product that solves this problem?

These customer development questions are part of [a broader set](https://www.entrepidpartners.com/blog/sample-customer-development-questions?ref=review.firstround.com) that Tyler and his team share with startups.

## How to Increase Your Confidence — And Signal — in Pricing Conversations

The key is to have a plan for these discussions. Regardless, here are the key steps for anyone who plans to lead a pricing conversation.
- **Qualify before you quantify — prospects need to earn pricing.**
- **Deliver your price in real-time.**

## TOOLS AND TIPS FOR TRACKING YOUR FEEDBACK

As your company grows, you’ll eventually have a CRM system that manages all of your data around pricing conversations. In the early days, however, Gaffney stresses not to overcomplicate the tracking process. **Just open Google Docs.**

What inputs should you be tracking? Early on, Gaffney simplifies it to five key areas:
- The price that was delivered
- The customer’s feedback on value and price
- Your exact counter proposal
- If the deal was a win or a loss
- Potential impact or how your solution might improve their business

## BRINGING IT ALL TOGETHER

For early-stage teams, it can be a challenge to know where to begin with pricing. **Don’t fall into the four most common traps:** choosing a price in a vacuum, setting and forgetting a price, pricing too low and over-engineering your pricing structure. **Ultimately,** this approach can serve as the minimum viable process to help nail your early pricing.