Published in the San Diego Union-Tribune, February 2, 2026
by Neil Senturia
Focus on your perceived value
From time to time, I am asked to be an adviser to a startup. Six years ago, I said yes to a young bioengineering-software entrepreneur. He comes in for the first big meeting and presents the pitch deck.
I listen politely. When he gets to the end, he asks, what do you think? I say, “Your pricing is wrong.” He is not thrilled because essentially I spent 23 minutes listening to his pitch, and my first comment is that his pricing is wrong.
I wasn’t sure if it was too high or too low, but I was sure it was wrong. Of course, about six months later he comes in for our monthly session, and says yes, you were right. The pricing was too low.
In the famous words of Marc Andreessen, “Raise prices, raise prices, raise prices.”
I do not get any points for my comment. It is baseline for almost every company. The pricing of the product in relation to its perceived value is often initially set too low. Now, this is a nuanced discussion.
I don’t think McDonald’s can charge $13 for a cheeseburger, but db Bistro Moderne, a fancy restaurant in New York, charged $43 for its cheeseburger — and yes, I actually went there once. I shared it with my bride, Ms. Bry.
It was good, but not that good. I would never go back. And yes, about a year later, the restaurant went out of business.
Another story. My daughter calls and wants to go skiing. Four-night minimum, $850 per room. Lift ticket: $300. Now I remember giving a lecture once on pricing elasticity, and I used the ski industry example when a lift ticket was $165.
I explained to the group that there would certainly come a time when they would bump up against a too-high price. Nothing is elastic forever. I estimated that a lift ticket would top out around $220, and after that, there would be a fall-off of customers. Of course, I was wrong. And by the way, the Utah lodge is sold out.
The entrepreneur wants no friction in the sales process. So she sets it low, thinking price is important. What we have learned in our little company is that pricing is not the gating factor at all. It is more basic than that. It is do we even want to use AI at all.
If you don’t like meat, it wouldn’t matter if McDonald’s charged 50 cents for a Big Mac. No sale. There is one more fishhook. Set it too low at the beginning, and it’s hard to have that conversation about raising your price later. A prospective new investor asks me a seminal question: What is your gross margin?
As in, do you make any money now, or can you make money at some later date?
OpenAI recently floated the idea that they are going to have advertising on their ChatGPT. The reason is simple: with their $30-per-seat pricing (800 million users, but only 5% pay for a subscription), they are slowly going broke.
Wow. Ads on Chatbots. Last year, Google Ads brought in $237 billion in revenue.
A famous joke is told in business school. Morty runs a widget factory; he loses one penny on each widget. His Harvard MBA son confronts him and says that at this rate, the company will go broke.
The father counters. No way, I’m going to make it up on volume. My little AI company has built some terrific software (you would expect me to say something different).
We began to sell, and our pricing was low, but we figured we would make it up on the usual lies — cost reduction, new features, new verticals, scale, etc.
Wrong again. We ran the numbers and saw that we would die before we could ever get there. The kicker in the story is simple.
We charged more. No one blinked. In fact, our “perceived value” increased.
At some rational level, I don’t get it. A Birkin handbag sells for more than $10,000, but you have to get in line to buy one.
Airport lounges now require branded credit cards. I know software is not a handbag or an airport lounge. But focus on your perceived value and price it appropriately.
Rule No. 815: You get what you pay for– sometimes.
Senturia is a serial entrepreneur who invests in startups. Please email ideas to [email protected].