A follow up to the post about pricing yesterday:
First Round Capital had a great post on their blog, Redeye, about the pricing challenge. They say that convincing a customer to part with the first penny, and pay anything at all for your service, is the hardest thing you will ever do….
Most entrepreneurs fall into the trap of assuming that there is a consistent elasticity in price – that is, the lower the price of what you’re selling, the higher the demand will be.
The truth is, scaling from $5 to $50 million is not the toughest part of a new venture – it’s getting your users to pay you anything at all. The biggest gap in any venture is that between a service that is free and one that costs a penny.
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