How to Know If You're Undercharging for Your SaaS

Most pre-traction SaaS founders undercharge. The number is usually 40-60% below what their target segment will actually pay - not because the product isn't worth it, but because the price was set by gut feel before any customer signal existed. Undercharging is quiet revenue destruction: it doesn't show up as a conversion problem, it shows up as a growth ceiling you can't explain.

Why this happens

The first pricing decision at an early-stage SaaS is almost always made under one of three conditions: the founder picked a number that felt "low enough not to be an objection," they looked at the cheapest competitor and priced below it, or they charged what their first customer said they'd pay without testing whether that customer was representative.

None of these methods surface actual willingness to pay. They produce a number that minimizes the fear of rejection - not a number that maximizes revenue or attracts the right buyers. The average SaaS company spends 8 hours total on pricing across its entire business lifespan. That's how you end up 40-60% below your real price ceiling without knowing it.

What to check first

These four questions identify undercharging faster than any pricing audit.

1. Do prospects sign up without asking about pricing?
If your conversion from pricing page to trial never generates a pricing objection, you may be priced below the threshold where buyers even register the cost as a real number. Friction at the right price level is a sign that buyers are taking the decision seriously. No friction at all often signals you're priced too low to be in consideration with serious buyers.

2. Do customers say it's "great value" or "surprisingly cheap"?
These phrases feel like compliments. They're signals that your price is below the buyer's expectation for what a product like this should cost. When buyers are surprised by how low your price is, you've left money on the table - and you've also signaled something about your product's tier that may be working against you in competitive evaluations.

3. Are you the cheapest option in your category?
Being the cheapest is a defensible position if it's intentional and tied to a clear segment story. If you're the cheapest by accident, you're likely attracting the most price-sensitive buyers in your market - the ones with the highest churn, the highest support load, and the lowest lifetime value.

4. Have you ever lost a deal because the price was too low?
This happens more than founders expect. In B2B, a price that's too low makes procurement teams and budget holders nervous - it signals that the product may not be enterprise-ready, may not have adequate support, or may not survive as a business. If a champion inside a target account can't defend your price to their CFO because it seems suspiciously low, you've priced yourself out of a deal by undercharging.

How to fix it

The Van Westendorp Price Sensitivity Meter is the fastest structured method for finding your actual acceptable price range. It uses four questions asked to real or simulated buyers:

At what price would this product be so cheap you'd question its quality?
At what price would this product seem like a bargain?
At what price would this product be getting expensive but still worth considering?
At what price would this product be too expensive to consider?

The intersection of these four curves gives you four thresholds: your floor (below this, you damage credibility), your acceptable lower bound, your acceptable upper bound, and your ceiling. Most early-stage SaaS products, when tested through this framework, find their current price sits at or below the "bargain" threshold - meaning buyers aren't even registering it as a real cost.

When raising prices, don't announce a blanket increase. Grandfather existing customers for one billing cycle, introduce the new price for all new signups, and track conversion rate at the new price for 30 days before concluding anything. A 20-40% price increase typically produces a 10-20% reduction in new signups from the most price-sensitive segment - and a meaningful increase in average revenue per account and long-term retention.

Remove the guesswork

The Van Westendorp model requires enough buyer conversations to be statistically meaningful - which takes time you may not have. RightPrice runs 100+ synthetic buyer interactions against your current pricing, returning a confidence score, your optimal price range, and a trial strategy recommendation. It's the same methodology - with enough sample size to be actionable - in hours rather than weeks.

Find your real price ceiling with RightPrice