How To Price Your Innovation Without Leaving Money on the Table

You've built something good. You know it's good. Your customers know it's good. Now comes the part that makes everyone uncomfortable: How much should you charge?

Most people think pricing is something you figure out after you've built the product. You price based on costs plus margin. Or you price based on what competitors charge. Or you price based on some survey data about what customers say they're willing to pay.

And then you wonder why you never get the adoption you expected, or you leave enormous amounts of money on the table, or customers seem weirdly reluctant to pay even though they love the product.

The problem is that you're thinking about pricing wrong. You're thinking about it as a separate decision from the product itself. But pricing isn't separate from the product. Pricing is part of the product. It's part of how customers experience what you've built.

I recently talked with Nevo Hadas, a South African entrepreneur who's fascinated—obsessed, really—with how pricing shapes innovation strategy. He calls himself a "pricing nerd." And what he's figured out about the relationship between pricing, product, and human behavior should fundamentally change how you think about innovation.

The Two Ways Most Companies Screw Up Pricing

Here's what Nevo sees again and again: Companies either price too high or they don't think about pricing strategically at all. They build a product, they test it with customers, and then they make some assumption about what to charge. And that assumption costs them dearly.

The first mistake is overestimating the benefit of your product and underestimating the inertia that keeps customers locked into what they're already doing. Most SaaS companies do this. They build something genuinely better than what exists. It's a real improvement. And then they price it high to signal quality and recoup the investment.

But here's what they don't account for: Switching costs. Even if your product is better, customers have to learn it. They have to migrate their data. They have to train their team. They have to change workflows. And there's psychological inertia—the status quo bias that makes people stick with what they know even when something better exists.

So they price high to signal quality, but in doing so, they make the switching decision even harder. The customer thinks: Yes, this is better. But is it 50% better? Is it worth the hassle of switching? Probably not.

And so they don't switch. They stay with the mediocre solution they know rather than embrace the better solution they have to pay for and learn how to use.

The second mistake is the opposite: Pricing too low because you're afraid of losing customers. You want maximum adoption, so you try to remove the pricing barrier. But here's what happens: Customers who don't pay are also customers who don't use. They don't have skin in the game. They don't invest in learning the product. They don't integrate it into their workflow. They just... don't use it.

So you get adoption numbers that look great on a spreadsheet. And retention numbers that are terrible. And revenue that doesn't exist.

The Onboarding Phase Nobody Plans For

Here's what Nevo nailed that most people miss: Pricing isn't just about covering costs and making profit. Pricing is a tool for shaping customer behavior and managing the adoption process.

If you price high, you're implicitly saying: This is valuable. You should take this seriously. You should invest time in learning it.

If you price low, you're saying: Try it. See if it works for you. No big commitment required.

Both can work. But they work for different types of products, different types of customers, and different adoption curves.

The mistake most companies make is pricing for the status quo. They say: Our product is better than what exists. So we should price close to what people are currently paying. Or maybe 20% higher to capture some of the value we're creating.

But what they should be asking is: What pricing strategy enables adoption? What pricing structure makes it easy for people to say yes and commit to learning this new thing?

For a SaaS product, Nevo pointed out something elegant: It's not about charging less. It's about structuring the pricing to match the adoption journey. Maybe you charge your standard price after a certain amount of time. But for the first six months or a year, you offer a discount or a different pricing model. You give people time to integrate the product into their workflow. You give them time to realize the value. You're buying their loyalty by reducing the friction at the critical moment when they need to make a decision.

Then later, when they're locked in, when they've invested time and reorganized workflows around your product, when switching would be expensive, you can increase the price. You've already won. You don't need to give discounts anymore.

This is very different from just pricing low from the start. You're being strategic about when you ask for money and how much.

The Hidden Architecture of Your Pricing

One of the most interesting insights Nevo shared was about how companies price for too many variables. An SaaS company will come in and say: We're going to charge per user, per gigabyte of data, per API call, and per integration. So now the customer has to navigate four different pricing dimensions to figure out what it's actually going to cost them.

This is insanity. You're making the buying decision harder, not easier.

Good pricing is simple. You pick one or two variables that actually correlate with value for the customer. And you price based on those. Everything else you either make free or you price differently.

Calendly got this right. They priced based on how many calendars you could manage. Simple. One variable. Easy to understand. And as customers got more value from the product (by managing more calendars), they paid more. The pricing aligned with value.

Most SaaS companies price like they're still managing analog constraints. They limit gigabytes because storage used to be expensive. They limit API calls because bandwidth used to be expensive. But those constraints don't exist anymore. You're artificially limiting functionality because you're attached to a pricing model that made sense five years ago.

What you should be doing is asking: What variable actually correlates with how much value I'm creating for this customer? And how do I make that simple and transparent?

Then you price based on that. And you make everything else free or cheap enough that it's not a deciding factor.

The Psychology of the Buying Decision

Here's where Nevo gets really interesting. He talks about the "buying journey" vs. the "using journey." And they're not the same thing.

The person buying the product might be completely different from the person using it. And they care about different things. The person buying is thinking about ROI, budget, whether this is a justified expense. The person using is thinking about whether this makes their job easier or better.

So your pricing message and your value message have to address both. You have to speak to the buyer about the financial case. But you also have to make sure the user experience is good, because word travels back to the buyer if the user is miserable.

Most companies mess this up. They focus entirely on the purchasing decision. They ignore what happens after the customer has paid. And then they're shocked when retention is terrible.

Nevo's insight is simpler: If you want people to click the "pay with my credit card" button, you have to do the work of understanding what actually drives that decision. What's the pain they're experiencing? What's the fear holding them back? What would it take to reduce the friction enough that they say yes?

It's not about discounting aggressively. It's about understanding the psychology of the decision and structuring your product and pricing to address what actually matters to the person making the decision.

Why You're Probably Leaving Money on the Table

Here's the uncomfortable part of Nevo's perspective: Most companies are either leaving money on the table or leaving adoption on the table. They're not optimizing for both.

If you're a SaaS company priced too high, you're leaving adoption on the table. Yes, you're capturing more revenue per customer. But you have fewer customers. And your growth is slower than it could be.

If you're priced too low, you're leaving money on the table. You have lots of customers. But they're not paying what your product is actually worth. And because they didn't invest much, they don't care much about the results.

The sweet spot is somewhere in the middle. You charge enough that customers take your product seriously. But not so much that switching friction becomes the deciding factor.

And here's the crazy part: Most companies never actually test different pricing models. They make one assumption. They ship with it. And then they treat it as fixed. They never experiment with what happens if they change the onboarding discount. Or simplify the pricing structure. Or charge for a different variable.

If they did, they'd probably find opportunities to increase both adoption and revenue. But it's uncomfortable to change pricing. It feels risky. So they don't.

What This Actually Means For Innovation

The deepest insight Nevo shared is this: Pricing is part of product-market fit. It's not separate from it. It's not something you figure out after you've achieved product-market fit. It's part of how you achieve it.

If you're innovating in a space where people are currently paying for something else, you have to be thoughtful about how you price relative to the alternatives. If you're creating a new market, you have to be thoughtful about how you price to enable adoption.

Either way, pricing isn't an afterthought. It's a core part of your innovation strategy.

Most innovation-focused people hate thinking about pricing. They want to focus on the product. The problem. The solution. How to make something better.

But the best innovators also think about pricing. They understand that how they price shapes whether their innovation actually gets adopted. They understand that pricing is a tool for managing customer behavior and shaping the adoption curve.

If you ignore pricing strategy, you're leaving leverage on the table. You're making your innovation harder to scale. You're leaving money on the table. You're probably leaving adoption on the table too.

What To Do About It

If you're launching something new, don't just think about the product. Think about the pricing journey. Map out what the customer is thinking at each stage. What's holding them back? What would it take to get them to commit?

Then design your pricing to address what actually matters in that journey. Maybe it's a free trial. Maybe it's a discount for the first year. Maybe it's a different pricing structure that lowers the initial commitment while maintaining long-term revenue as the customer gets more value.

And don't set it and forget it. Test different models. Pay attention to what works. Be willing to change if you discover something isn't working.

Most companies are bad at this because it feels risky and mercenary. You're "optimizing for money" instead of "focusing on the customer." But that's a false choice. The right pricing strategy makes it easier for customers to say yes. It signals that your product is valuable. It aligns your incentives with theirs.

The best pricing is the kind where the customer feels like they're getting a good deal and you're capturing the value you created. Both things are true. Not at war with each other.

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Want the Full Story?

If this resonates, listen to Yaniv Corem's full conversation with Nevo Hadas on The School of Innovation podcast. They dig deep into SaaS pricing strategies, how to think about pricing in different market contexts, and why pricing is actually a product decision, not just a finance decision.

Because here's the thing: Most innovation advice focuses entirely on building the right product. And that matters. But how you price your product matters just as much. Get it right, and you accelerate adoption and build a sustainable business. Get it wrong, and you're leaving both adoption and revenue on the table.

The pricing nerds have figured something out. It's time the rest of us caught up.