#200: The Biggest Pricing Mistakes That Hurt Growing SaaS Companies - TJ Joosten

Summary of #200: The Biggest Pricing Mistakes That Hurt Growing SaaS Companies - TJ Joosten

by Greg Head

58m•June 12, 2026
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Overview of #200: The Biggest Pricing Mistakes That Hurt Growing SaaS Companies

In this episode of the Practical Founders Podcast, Greg Head talks with SaaS pricing consultant TJ Joosten about the biggest pricing mistakes growing software companies make, why founders delay price changes, and how pricing should evolve as SaaS products add AI, usage-based billing, and service layers. The central theme is simple: pricing is positioning, and most companies leave significant revenue on the table because they underprice, overuse blunt seat-based models, or fail to adapt their packaging as the value they deliver changes.

Key Takeaways

  • Most SaaS companies are underpriced

    • If pricing rarely causes friction, that’s often a sign the company is charging too little.
    • TJ suggests that if less than 20% of deals create pricing pushback, there may be room to raise prices.

  • Pricing is a business lever, not just a sales tactic

    • Better pricing can function like “self-funded growth” by increasing revenue and margin without outside capital.
    • Founders often treat price increases as risky, but in practice they’re usually one of the healthiest growth levers available.

  • The “monetization gap” grows over time

    • As a company’s delivered value increases, its price often rises much more slowly.
    • The longer this gap goes unaddressed, the harder it becomes to close.

  • AI is changing the pricing conversation

    • AI can justify usage-based, outcome-based, or hybrid pricing.
    • But AI can also destroy margins if companies don’t understand their costs, especially when token or inference usage spikes.

Biggest Pricing Mistakes SaaS Founders Make

1. Delaying price increases

  • Founders are emotionally attached to early customers and often hesitate to raise prices.
  • TJ says most founders and operators procrastinate pricing decisions even when evidence suggests they should move.

2. Using the wrong pricing model for the value delivered

  • Seat-based pricing works well for some software, but not all.
  • If the product creates value through usage, labor replacement, or outcomes, pricing should reflect that.

3. Treating AI as a feature instead of a new value proposition

  • If AI is only making internal processes cheaper, that doesn’t automatically justify charging more.
  • If AI creates a new customer-facing outcome, then it may deserve new packaging and pricing.

4. Failing to manage expectations

  • Companies often launch AI features as “beta” and leave them there too long.
  • If customers get used to something for free, it becomes much harder to monetize later.

5. Letting volume discounts get out of control

  • As companies move upmarket, they sometimes keep extending old discount logic.
  • TJ warns this can lead to massive discounts for larger customers when the pricing structure is never reset.

How AI Is Changing SaaS Pricing

Hybrid pricing is becoming the norm

  • TJ believes most SaaS and AI products should consider a base fee + usage component.
  • A fixed fee creates commitment and switching cost; usage pricing aligns cost with value.

AI pricing needs caps and clear contract language

  • AI-heavy products can create unexpectedly high costs.
  • Contracts should include:
    • fair use clauses
    • usage caps
    • escalation triggers
    • clear expectations around how AI usage is billed

“Automation” sells worse than “assistant”

  • Customers often resist paying much for “automation,” because they mentally compare it to software.
  • But if the product is positioned as an assistant, staff member, or labor replacement, pricing can be much higher.

Outcome and labor replacement pricing can command premiums

  • If a product replaces human work, customers may pay a meaningful share of that labor cost.
  • TJ sees the strongest AI pricing when companies position the product as a full job-doer, not just a tool.

Stage-by-Stage Pricing Dynamics

Early-stage companies: under $1M ARR

  • Pricing is usually ad hoc and founder-driven.
  • Great for experimentation, but often too messy to scale without structure.

Growth stage: around $3M to $5M ARR

  • TJ considers this the sweet spot.
  • The founder or CEO is usually still close enough to own pricing, but the business has enough data to make better decisions.

Later stage: $10M+ ARR

  • Pricing becomes more political.
  • Product, sales, finance, and marketing all have opinions, so ownership must be more deliberate.

Regional and Market Differences

  • TJ works with companies across Europe, North America, Africa, and Asia.
  • He sees more variation within Europe than between Europe and the U.S.
  • Key differences include:
    • procurement maturity
    • customer loyalty
    • churn behavior
    • willingness to accept usage-based or outcome-based pricing
  • The U.S. market is generally more open to pricing experimentation, while some southern European markets are more resistant to variable models.

How TJ Works With Companies

Typical engagement model

  • TJ starts with a diagnosis.
  • Then he usually works in one of two ways:
    • a full pricing and packaging project
    • help on a major deal or tender/RFP

His process

  • Packaging first, pricing last
  • Validate assumptions with live deals
  • Test new structures in a controlled way
  • Iterate before rolling changes out broadly

Why he focuses on packaging

  • TJ argues that the structure of the offer often matters more than the raw price.
  • If you change the offer shape, the customer may accept a higher effective price without the same friction.

Practical Advice for Founders

  • Try one pricing change on your next quote
    • Add a platform fee.
    • Charge for onboarding.
    • Introduce usage-based pricing.
    • Remove or revise a volume discount.
  • Don’t assume pricing must change for everyone at once
    • In B2B, pricing can be tested deal by deal.
  • Ask lost deals why they didn’t buy
    • If they don’t say “price,” then price may not be the real issue.
  • Treat pricing as a muscle
    • The first experiment is awkward.
    • The second gets easier.
    • By the third, you’ve built confidence and a repeatable motion.

Notable Insight

“Pricing is positioning.”

That idea ran through the entire conversation. The best pricing isn’t just about maximizing revenue—it’s about aligning how you charge with the value, risk, and outcome your product creates for customers.

Resources Mentioned

  • Reflexer — TJ’s pricing consultancy
  • Money on the Table — TJ’s Substack on pricing and monetization
  • Practical Founders Podcast — Greg Head’s show for bootstrapped and practical SaaS founders

Final Takeaway

The episode’s main message is that founders should stop treating pricing as a one-time decision and start treating it as an ongoing growth lever. For most SaaS companies, especially those adding AI, there is still significant upside in better packaging, smarter pricing models, and more confident experimentation.