10-5-20 rule

Kevin Hale explains how startups can set and optimize prices using the relationship between cost, price, and customer value. He argues that startups often underprice because they misunderstand their costs, their product’s value, or the early adopters they should target. The talk shows how to compare price points using conversion, sales volume, and revenue, and how price shapes the sales and marketing a business can afford. Hale closes with a practical rule: price at roughly one-tenth of perceived value, then raise prices until about 20% of deals are lost.