Fathom realized customers bought Gong for its promised AI analytics but primarily used it as a simple recording repository—a "security blanket." This massive gap between marketed value ($150/seat) and actual used value justified a disruptive, 5x lower price point ($25/seat) that incumbents couldn't easily match.
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After TurboPuffer quoted a price, Notion's team asked if they would lose money on the deal. This concern wasn't a negotiation tactic but a genuine fear that their new critical vendor was unsustainable. This is a powerful signal of true market disruption.
A slightly better UI or a faster experience is not enough to unseat an entrenched competitor. The new product's value must be so overwhelmingly superior that it makes the significant cost and effort of switching an obvious, undeniable decision for the customer from the very first demo.
Traditional SaaS companies are trapped by their per-seat pricing model. Their own AI agents, if successful, would reduce the number of human seats needed, cannibalizing their core revenue. AI-native startups exploit this by using value-based pricing (e.g., tasks completed), aligning their success with customer automation goals.
While executives were happy with Gong, Fathom's interviews with individual contributors (ICs) revealed a critical flaw: the platform was too slow for their immediate post-meeting workflow. This overlooked pain point became Fathom's wedge to enter the market and build a product for the end-user, not just the buyer.
A cited 2016 study from "Monetizing Innovation" reveals a critical flaw in corporate strategy: 80% of companies determine pricing based on internal costs or competitor analysis, rather than investing in research to understand the actual value delivered to customers.
Effective pricing is not just a number; it is a value story. The ultimate test is whether a customer can accurately pitch your product's pricing and value proposition to someone else. This reframes pricing from a simple number to a compelling narrative.
Feed AI your detailed persona research and data on your top competitors. Then, ask it to identify key persona pain points and values that competitors' positioning fails to address. This process systematically uncovers arbitrage opportunities for differentiated messaging.
Lacking market comparables, Nexla priced its initial enterprise deals by first understanding the customer's internal cost to solve the same problem. They then proposed a price that was a clear fraction—like one-fifth or one-tenth—of that internal cost, making the ROI immediately obvious and justifiable for the buyer.
If you consistently lose on price, you likely don't understand your own unique value. Interview your current customers to find out why they *really* buy from you. You may discover hidden differentiators—like personalized support or company stability—that you can then explicitly work into future sales conversations.
Shure prices its service at $100/month vs. the industry's ~$600. This isn't just to compete with incumbents like Deel, but to serve a massive pool of smaller companies for whom traditional EORs were prohibitively expensive, thereby expanding the total addressable market.
