The Library of Minds The Pricing Mistakes That Kill Even Great Startups with Madhavan Ramanujam
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Dec 18, 2025 
Madhavan Ramanujam, a pricing expert and former Simon-Kucher partner, dives into the essential strategies of monetization for startups. He reveals common pricing mistakes that can sink even the best ideas, using Blockbuster and Netflix as cautionary tales. Madhavan discusses the importance of testing willingness to pay and emphasizes when to delay monetization to maximize growth. He also touches on the impact of AI on pricing strategies, arguing for value-based approaches and the need for founders to think about pricing from day one, likening Steve Jobs to a pricing genius.
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The 20/80 Willingness-To-Pay Rule
- Twenty percent of features drive eighty percent of willingness to pay.
- Founders often build the hard 80% and give away the valuable 20% for free.
Blockbuster Versus Netflix Pricing Pivot
- Blockbuster charged per movie with late fees and store visits, which hurt customers.
- Netflix changed the pricing model to a flat subscription and destroyed Blockbuster's business.
LinkedIn's Deliberate Monetization Path
- Zing charged by subscription and locked features behind paywalls early on.
- LinkedIn kept core product free, then monetized employers and premium features later and dominated the market.