The leading cause of startup death is a low-ball price

A startup cannot defeat the entrenched market leader by chasing and low balling the incumbent’s thriftiest clients.

This may be a strategy that anticipates converting those new clients over time to profitability. Maybe. Big gamble that may not endure economic boom and busts.

Low-balled clients are always in pursuit of the cheapest vendor.

It is my experience that a new entrant cannot win a war of attrition because the market leaders are profitable and can end your fall campaign quickly and violently by using pricing and their own marketing and brute force tactically.

Startups are cheap to launch into space but very expensive to maintain an orbit. Profitability from day one/client one is an imperative.

Forget the pricing schema that you plotted with bluster and optimism. Scrap it and start on a blank white board and work price backwards.

The ‘lifetime value’ of a client only works when the client is retained ‘for a lifetime’.

Raise your prices by 20% immediately and staff for client intimacy. It is the Achilles heel of the market leaders.

YCombinator guides its companies to build clones of the market leaders, then flood the market with imitation products.

As a strategy for ‘company production’ I have seen this work well over time in other product environments. In the late 90’s American companies such as Texas Instruments and IBM would spend billions on R&D. Then Japanese and Korean companies would clone it and dump their  product on the market. In a commodity market, the low cost provider wins.

So, I think fundamentally it’s a sound theory. The problem is that the startup companies are being forced to drastically compress a progressive sales strategy to one that is tremendously inefficient. The further problem is that most companies accept it philosophically as sound practice.

The end?