Developers Scared to Charge Fair Value for Their Software Product
One of the most common problems technical founders face has nothing to do with code. It’s pricing.
An IndieHackers podcast episode featuring Peter and Calvin from Segment digs into exactly this problem - and the lessons apply to nearly every developer who has tried to sell their own software product.
The Problem: Underpricing Out of Fear
Segment’s founders initially charged ridiculously low prices despite building genuinely valuable software. At one point, a customer named Eduardo from Brazil reached out to express concern. His message said something like: “I’m very concerned about your pricing.”
The founders braced for a complaint about prices being too high. But Eduardo meant the opposite - he was worried they were charging too little and wouldn’t be able to sustain the business.
The founders later acknowledged the dynamic: “we were also terrified of asking for money. So we just started asking people for like ridiculously small amounts of money.”
It took approximately one year before they started charging rates that actually reflected the value they were delivering.
Solution 1: Get a Sales Advisor Who Will Force the Conversation
The turning point for Segment came from a sales advisor named Mitch. When the founders were hesitating about asking for $120,000 per year - literally 1,000x their previous thinking of $120 per year - Mitch drew a hard line: “if you don’t ask for $120,000 a year, then I quit as your advisor.”
That forced conversation led to the first customer negotiating down to $18,000 annually. Which, notably, was still two orders of magnitude higher than what the founders had been charging before.
Over the following six months of progressively larger pricing conversations, the founders worked through their psychological barriers. Each time they asked for more and the world didn’t end, it got a little easier.
The lesson: an outside advisor who has seen this pattern before - and will hold you accountable - can short-circuit years of undercharging.
Solution 2: Price Based on Customer Value, Not Your Production Costs
The other critical shift was how Segment’s founders thought about what their product actually was.
They initially thought of Segment as a developer tool - something that saved engineering time during setup. But the real value was much larger. Companies that weren’t using Segment were often maintaining custom data pipelines with 10 to 15 highly trained (and highly paid) engineers. That’s significant operational cost and ongoing headcount.
Segment wasn’t just saving a few hours of setup time. It was replacing a team.
Once the founders reframed their value in those terms - the true cost of the problem they were solving, not the marginal cost of running their infrastructure - pricing at $120,000 per year made complete sense.
What This Means for Technical Founders
If you built something that solves a real problem, there’s a good chance you’re undercharging. The psychological barrier to asking for more is real, but it’s not rational. Customers who get value don’t resent paying for it - they resent paying for things that don’t deliver.
A few practical steps:
- Talk to a sales advisor or mentor who has experience with SaaS pricing and will push you toward market rates
- Map your pricing to customer value, not your costs or what feels “reasonable” to you as the builder
- Have the uncomfortable conversation. The worst case is usually a negotiation, not a rejection - and even a negotiation lands you far higher than where you started
The founders who crack this problem early grow faster. The ones who don’t leave enormous revenue on the table while wondering why growth feels hard.
GTM Works helps technical founders and SaaS teams with outbound sales strategy, cold email execution, demo setup, and deal support. If you’re navigating pricing or pipeline challenges, get in touch.