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Marc Andreessen Tells Every Founder the Same Thing: Raise Your Prices.

By Marc Andreessen · Product & Building · 2 min read

Most founders think lower prices help customers. Andreessen says higher prices make the product better.

Key Points

Price by value, not by cost — capture a percentage of what you're worth to the customer
Higher prices fund more R&D which makes the product better for everyone
AI companies are experimenting with pricing by the value of a human worker they replace

I'm always urging founders to raise prices, raise prices, raise prices.

The Speech Andreessen Gives Every Founder

Marc Andreessen has a talk he gives over and over. To every founder. In every portfolio company.

Raise your prices. Raise your prices. Raise your prices.

Most founders resist. They think low prices make customers happy. Andreessen thinks they're leaving money and product quality on the table.

I'm always urging founders to raise prices. Most won't listen.

Price by Value, Not by Cost

The core principle of pricing: don't price by what it costs you. Price by what it's worth to the customer.

If your software saves a company $10 million a year, don't charge $10,000. Charge a percentage of the value you create.

a16z has dedicated pricing experts on staff. They spend serious time with portfolio companies on this. Because most companies treat pricing as an afterthought.

If you're pricing by cost, you're leaving a fortune on the table.

The Counterintuitive Truth About High Prices

The naive view: lower prices are better for customers. The sophisticated view: higher prices are often better for customers.

Why? A company with higher margins invests more in R&D. The product gets better. Faster. The customer benefits from a product that keeps improving.

Most people buying things aren't looking for the cheapest option. They want something that works.

Higher prices fund better products. Customers win.

AI Changes the Pricing Game

AI is blowing up traditional pricing models. Some companies charge per API call. Some use SaaS pricing. But the most interesting ones are exploring something new.

If AI can do the job of a coder, doctor, or lawyer, you could price based on the value of that human worker. That's pricing by productivity, not by compute.

Or price by augmentation. If AI makes a human doctor 3x more productive, charge a percentage of that uplift.

AI lets you price by the value of the human you're replacing or augmenting.

The Startup Pricing Frontier

Andreessen sees a wave of experimentation in startup pricing right now. Per-seat. Per-outcome. Per-agent. Companies are testing everything.

He thinks this is healthy. The old models were built for a different world. AI demands new thinking.

But the fundamental advice stays the same. Whatever model you pick, charge more than you think you should.

The model can change. The rule is the same: charge more.