Pricing pilots, niching down, and the stair-step method

Executive overview

Most early-stage founders either overthink risk or underestimate complexity. Pilot pricing, niche selection, and the decision to build vs. acquire all follow the same logic: charge fairly, stay focused, and build skills before you need them.

Rob answers four listener questions covering pilot project pricing, how to niche down using industry knowledge, the realities of building an open-source-based business, and when (if ever) to skip the stair-step approach.

Entrepreneurship is making calculated gambles — de-risking is just hedging with extra steps.

Pilot project pricing

• Charge for pilots. Free pilots waste time and remove the customer's skin in the game.
• Start with the value delivered to a single office or subset — price at ~10% of that value.
• Separate custom integration work from recurring fees; quote it as a one-time fixed price.
• If you're building features the customer will drive but others will use, charge ~50% of normal rate.
• Think about regret in both outcomes: if the pilot fails, you still want to feel okay about the work you put in.
• Always get a verbal commitment: "If this works, we roll it out further." That's what makes it a pilot, not just a contract.

Niching down with industry knowledge

• Don't try to de-risk a niche bet — accept the gamble and course-correct with new data.
• Pivoting, expanding, and adjusting are what experienced founders do; quitting after one failed attempt is what inexperienced ones do.
• Start focused on one vertical. Keep your ears open for adjacent verticals pulling toward you.
• Look for the "twinkle in the eye" moment — when a prospect sees the solution and feels it immediately.
• Don't chase 20 ICPs. Don't lock to one forever. Follow market pull as evidence accumulates.
• Plateaus usually mean you've exhausted your current marketing approach, not your market.

Building an open-source-based business

• Building a business like Sidekick requires a wildly successful open-source project first — that itself involves significant luck.
• Study how successful open-source projects got early traction: most founders had some existing audience or community standing.
• For open source, building an audience makes sense — unlike SaaS, where it's rarely the best use of time dollar-for-dollar.
• Once an open-source project gains traction, start charging as soon as enterprise users come knocking: paid add-ons, paid support, enterprise plans.
• Underpricing a successful open-source project is a choice, not a necessity — be deliberate about it.

When to skip the stair-step approach

• The stair-step method exists to build confidence, experience, skills, time, and money before tackling something harder.
• Having money or time alone doesn't justify skipping steps — you also need the skills to build, launch, market, and grow a SaaS.
• SaaS is one of the most complex businesses to run on the internet; founders who've never done it consistently underestimate this.
• Acquisitions are often better than builds: faster path to product-market fit, immediate revenue, and a shorter learning curve.
• A $30K acquisition that already has product-market fit beats a $30K acquisition that's pre-revenue and pre-validated.
• Buying something small just to "learn" only works if there's enough substance there to actually teach you something.
• Early acquisitions (Hittail at $31K → $1M total; .NET Invoice) showed the model works — but only when the product already has traction.