AI companies should align their pricing with what matters to their customers after demonstrating value, rather than relying solely on fixed or consumption-based pricing models.

When pricing your product, focus on the value it delivers to the customer rather than just the cost of providing the service.

Pricing isn't just a number; it's a strategy that should evolve as your business grows, allowing for flexibility and adaptation to avoid common mistakes.

To create a valuable business model, focus on reducing customer acquisition costs while enhancing customer lifetime value through retention and upselling strategies.

Being cheaper than competitors is often a losing strategy. As AI models become more capable and affordable, differentiation through unique value propositions becomes increasingly important.

Pricing below cost can be a risky strategy for gaining market share, often leading to unsustainable business practices. You might want to price a little lower now because your margins are going to improve with time, but it's a risky maneuver, and I advise startups to maintain an 80 to 90% gross margin.

Most startups are undercharging, and relying solely on lower prices as a differentiator is not a sustainable strategy.

The pricing maturity curve suggests that companies must evolve from activity-based pricing to value-based pricing to avoid competition based solely on cost.

Pricing should be viewed as a tool to learn about customer demand and value perception, helping to refine your product offering.