In a famous study, radiologists were shown the same X-rays twice, weeks apart, without being told they were repeats. They contradicted their own earlier diagnosis about 20% of the time. These were experts looking at the same image!

Kahneman called this kind of thing the illusion of validity: the confidence we feel in a judgment has almost nothing to do with whether it's actually correct.

It comes from the story being coherent, not from the story being right.

I think about this every time a founder tells me their pricing is "dialed in."

Here's how most DTC prices get set. You take your cost. You add the margin you want. You glance at two competitors. You pick a number that feels right. And because that process is coherent (every step follows from the last), you walk away genuinely confident the number is correct.

But coherent isn't the same as correct. You didn't discover what customers will pay. You constructed a number that felt reasonable and then trusted the feeling.

The tell is that almost nobody can answer a simple question: how do you know? Not "how did you pick it" but "how do you know it's right?" The honest answer is usually that it's never been tested. The confidence is real. The evidence is missing.

McKinsey found that even sophisticated companies get roughly 30% of pricing decisions wrong. Those are firms with pricing teams. If they miss a third of the time with data, what are the odds you nailed it on feel?

You don't have to overhaul anything. Just turn one confident guess into one tested number. Pick your best seller, run a real test, and find out whether the gut was right.

It might be. But "might be" and "I'm sure" are very different things to be running your margins on.