Should you launch your product for free? | A growing debate emerging in the startup world is about the use of free product launches to gain an initial customer base. For a long time, the standard strategy for SaaS companies was to launch a free product and then upsell to a paid version. This was the strategy used by companies like Slack, Dropbox, Robinhood and many more.
Today, however, with the rise of AI and the ability to launch new products seemingly instantaneously, there is a growing debate around the value of such free products. Investors specifically are now questioning whether it is worth backing these types of companies that don’t have proven revenues and whose products/services can often be replicated. | In this newsletter I want to explore a different way of building that I have seen some founders employ to great success. It is the exact opposite of offering free products at the early stage. | High Priced MVPs | A unique way that I have seen some founders (including a few subscribers) grow their business is to start with a high-priced MVP. | Using the example of Slack, instead of offering it for free and then upselling to teams as the product improves and they need more services, someone starting Slack today would reach out to companies with a basic demo and offer to implement it for their team at a high prices (let’s say $50/person). The idea here would be to only target teams of 50+ so that each client you sign brings $2500 in revenue so you can dedicate your time to focusing on their needs and offer a more personalized service with bugs and issues being fixed nearly instantaneously. | In this process, you also attract only the companies that most need your product, the ones that are most desperate to replace email with an internal messaging tool. | So now, instead of having 1000s of free customers with no revenue and no proof of who your ideal customer is. You have 1-5 customers paying very large amounts who are your ideal customers and are telling you what they need. This allows you to continue to improve and iterate based on the feedback from these ideal customers and to make money in the process.
Over time, as you look to gain more market share, you can lower prices and attract more people, eventually lowering them to the optimal price for profits/market share. | | Would you implement this strategy of high pricing at pre-seed? | | | In partnership with |  |
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| Big investors are buying this “unlisted” stock | | When the founder who sold his last company to Zillow for $120M starts a new venture, people notice. That’s why the same VCs who backed Uber, Venmo, and eBay also invested in Pacaso. | Disrupting the real estate industry once again, Pacaso’s streamlined platform offers co-ownership of premier properties, revamping the $1.3T vacation home market. | And it works. By handing keys to 2,000+ happy homeowners, Pacaso has already made $110M+ in gross profits in their operating history. | Now, after 41% YoY gross profit growth last year alone, they recently reserved the Nasdaq ticker PCSO. | Invest for $2.90/Share | Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals. |
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