Pricing 101 for Solo Founders: Stop Undervaluing Your Code

I see the same pattern in almost every developer-led Micro-SaaS launch.

The code is clean. The architecture is scalable. The UI is decent. And then, there’s the pricing page: $5/month.

When I ask why, the answer is usually, "Well, the API costs are low, and I just want to get users."

This is the Cost-Plus Fallacy, and it is the fastest way to kill a solo business. As engineers, we are trained to optimize for efficiency and cost reduction. But pricing isn't about covering your AWS bill; it's about capturing the value you create for the customer.

If you are a solo founder, you don't have a sales team. You don't have a support staff. Your pricing model is your sales rep. If it’s weak, you lose. Here is how to engineer a pricing strategy that actually works.

1. The Value Metric vs. Cost Metric

The first step to fixing your pricing is decoupling it from your server costs.

If you are building an AI wrapper that summarizes PDFs, your cost is OpenAI tokens. If you charge based on tokens (e.g., "$0.05 per 1k tokens"), you are commoditizing yourself. You are forcing the user to do the math on how many tokens a PDF uses. Users hate math.

Instead, charge based on the Value Metric. What is the unit of value the user receives?

• Bad (Cost-based): Price per GB of storage.
• Good (Value-based): Price per Project or Team Member.

For the PDF tool, the value metric is the document. A lawyer doesn't care about tokens; they care that they saved 2 hours reading a contract. Charging $29/month for "50 Documents" creates a direct link between the price and the time saved.

Finding Your Metric

To find your metric, fill in this variable:

If the action is "sends an email," charge per email sent. If the action is "generates a lead," charge per lead. Align your revenue growth with their success.

2. Structuring Tiers: The Rule of Three

Never offer a single price point. You need to segment your users based on their willingness to pay. Standard practice suggests three tiers.

Tier 1: The "Hobbyist" / Indifference Price

This is your low-barrier entry. However, for B2B Micro-SaaS, avoid the $5–$9 trap. The support burden of a $9 customer is identical to a $49 customer, but the $9 customer churns faster.

Recommendation: Start B2B pricing at roughly $19–$29/month. If your tool solves a real business problem, this is a trivial expense.

Tier 2: The "Pro" / Target Price

This is where you want 80% of your users to land. It should contain the core features needed for a power user.

Tier 3: The "Agency" / Anchor Price

This tier exists for two reasons:

1. To capture revenue from whales (users with big budgets).
2. To make Tier 2 look like a bargain (Price Anchoring).

If Tier 2 is $49, make Tier 3 $149. Psychologically, the jump makes $49 feel "safe" and "reasonable." Without the $149 anchor, $49 might feel expensive.

3. Psychology and Anchoring

Pricing is not logic; it is perception. As developers, we hate this. We want $20 to mean $20. But in the human brain, $20 looks different depending on what it is standing next to.

When building your pricing component, use Visual Hierarchy to guide the user.

• Highlight the Recommended Plan: Make the middle card larger, give it a border, or add a "Most Popular" badge. This reduces cognitive load. Users don't want to decide; they want to be told what is best.
• The Decoy Effect: Sometimes, you create a pricing tier that you don't actually expect people to buy, specifically to push them toward another tier.

Example:

• Basic: $29 (Limited features)
• Pro: $59 (All features)
• Pro Plus: $65 (All features + Priority Support)

The small gap between Pro and Pro Plus makes the upgrade a "no-brainer," increasing your Average Revenue Per User (ARPU).

4. The "Free" Problem

Should you offer a Free Tier?

For solo founders: Generally, no.

A permanent free tier attracts noise. It attracts users who will never pay but will flood your inbox with feature requests and bug reports. It bloats your database and eats your API limits.

The Alternative: Reverse Trial

Instead of Freemium, use a Reverse Trial.

1. User signs up.
2. They immediately get 14 days of the Top Tier plan (no credit card required).
3. At the end of 14 days, if they don't pay, they get downgraded to a highly restricted "readonly" state or locked out.

This leverages Loss Aversion. Users hate losing access to features they have already used. It converts significantly better than asking them to upgrade from a restricted free tier to a paid tier.

5. Technical Implementation

Don't build your own billing system. It is a waste of engineering cycles.

Use Stripe Checkout or LemonSqueezy as your Merchant of Record (MoR). The MoR model is particularly good for solo devs because they handle global sales tax compliance (VAT, GST), which is a nightmare to code yourself.

Structure your database to handle entitlements, not just payments.

// Bad: Checking payment status directly
if (user.hasPaid) { ... }

// Good: Checking entitlement
if (user.plan.canExportPDF) { ... }

This abstraction allows you to change pricing tiers in Stripe without refactoring your codebase.

6. Grandfathering and Early Adopters

When you are in the "Ship" phase, you need validation more than profit.

Launch with an "Early Adopter Lifetime Deal (LTD)" or a heavy discount for the first 50 users. Be transparent: "Pricing will increase to $X next month."

This creates urgency. Once you have your first cohort, grandfather them in. Never raise prices on your early believers. They are your beta testers and your evangelists. New pricing applies to new users only.

Summary Checklist

• [ ] Metric: Am I charging for value, not API costs?
• [ ] Tiers: Do I have a Low, Mid, and High tier?
• [ ] Anchor: Is my high tier making my mid tier look cheap?
• [ ] Trial: Am I using a Reverse Trial instead of a Freeloader tier?
• [ ] Tech: Am I using an MoR (LemonSqueezy/Stripe) to handle taxes?

Pricing is not static. It is code. You deploy v1, you monitor the logs (conversion rates), and you push patches (price updates). Don't be afraid to double your prices. If nobody is complaining about the price, you are too cheap.