What does "do not underprice your product" mean in your opinion?

I don't have answer for "How do you know you are pricing the product right", though I think I've seen some statistical answer for that (number of leads buying, number of free trials converting to paying etc), so you could try looking that up. But for underpricing product I have better opinion. Price increase is always harder, both for you to do it, but also for customers to take it in. Much better approach is to start high, and then lower it, if needed... Either permanently, or just via discounts. There is also important to distinguish building a business, and making a living (or doing side hustle). If you are building business, you need to grow it, meaning more manpower, more marketing, make growth to happen. With making a living or side hustle, it is enough that you get some money, and stay afloat. But you can't afford paying others to help you, like marketing, or get more coders to work with you. I haven't heard of Carrd before, but I googled it a bit. Found this: https://themakingof.carrd.co/ Which is story how that became to be. And it states that after first year, there was 900 pro customers (each paying $19/year, total of €17k/year). That $17k sounds enough to support that individual programmer. But does that leave him with money to make marketing? Definitely not enough to hire team to make it even better. If he has bigger expenses in his life, or he has been working for someone else, getting too little from Carrd could eat up motivation to keep working there. And when you've teached those 900 initial customers that $19/y is price, trying to increase that will make people leave. So bottomline... price needs to be in sweet spot where you attract customers, but enough so you can properly do marketing, and get more customers, so you can grow. Even if you plan on getting funding, you need serious traction in userbase, which most likely means you've needed marketing. These kind of thoughts I have. And they are very same things I am thinking constantly, as I'm planning on launching my own product in few months. :D Correct prices ain't easy to figure.

if you competitors are charging more and getting customer they can spend more to acquire the customers and also can serve more.

It's important to remember that Carrd is an exception and 99% of the rest of the market cannot pull that off. Better off increasing the value of the product/service and charging more. It's scary, but confidence is important. My rule of thumb is that if I'm 90% sure they will buy it (or more than 90%), I raise the price and then find ways of making the offer better in a way that's low-cost to me. I've done this at agencies, online communities, etc. It's more about what they stand to gain from the purchase and setting a number based on that. Hope that helps! All the best