The Hidden Cost of "Too Good To Be True" Offers

I was reading about Cursor yesterday — you know, that AI coding tool that took the developer world by storm. They grew from $100M to $500M in revenue in just six months, the fastest SaaS growth ever recorded.

Impressive, right? Until it wasn't.

Here's what happened: Cursor built their entire business on a classic loss leader strategy. They charged users $20/month but were actually spending $60+ per user on API costs. Every single customer was a financial black hole.

One developer calculated that in a single coding session, he cost Cursor $50-60 in API fees on his $20/month subscription.

When Cursor finally had to change their pricing (as any business would), their community revolted. Even the CEO's apology came too late. The damage was already done.

So, why this matters for your brand?

This isn't just about one company's mistake. It's about a fundamental truth in business that too many brands ignore:

When you build on an unsustainable foundation, collapse is inevitable.

I see this pattern repeating across industries. Brands attract customers with offers they can't possibly maintain, hoping to figure out profitability later. When reality hits, they're forced to change terms, raise prices, or reduce value — and customers feel betrayed.

The real problem? It trains customers to value the wrong things. They become attached to the unsustainable deal rather than your actual value proposition.

Look at the contrast with something like Gillette's Model, they sell the razor handle cheaply knowing they'll profit on blade refills. That works because the model is transparent and sustainable from day one.

Creating a sustainable brand isn't about flashy growth metrics or venture funding. It's about building honest relationships with customers who value what you actually offer — not just a temporary deal.

This means:

• Starting with pricing that reflects your true costs and value

• Attracting customers who appreciate your core offering

• Building trust through transparency and consistency

• Focusing on retention rather than acquisition at all costs

When you build a brand on these principles, you create something that can weather market changes and grow steadily for years, not just quarters.

Want to build a brand that stands the test of time?

If you're ready to build a brand that creates genuine customer loyalty without resorting to unsustainable tactics, I've created something for you.

The Brand Engine Masterclass is your step-by-step guide on how to build a brand that customers genuinely connect with — one that generates sustainable growth through retention rather than constant acquisition.

Learn the exact framework I've used to help companies build brands that stand the test of time, even when competitors are racing to the bottom with price wars.

Check out the Brand Engine Masterclass because your brand deserves better than a quick rise and painful fall.

Until next week,
— Shashank

P.S.

If you enjoyed this edition, I'd love to hear your thoughts. What's one unsustainable practice you've seen brands use that eventually backfired?

P.P.S.

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