Trends in SaaS Pricing Models

Salesforce just fired the starting gun on a seismic shift in how we pay for software. At Salesforce #Agentforce, they announced they’re moving away from the traditional per-seat SaaS model to a consumption-based pricing for their AI agents. This is huge. Why? Because it signals the end of paying just to have access to technology. Instead, we’re moving toward paying for outcomes—the actual value delivered. Think about it. In a world where AI agents can perform the job functions of entire departments, does it make sense to charge per seat? Probably not. Here’s what’s changing: - From access to outcomes: Companies will pay for what the AI actually accomplishes. - From subscriptions to value: Pricing adjusts based on usage and results. - From Software-as-a-Service to Agent-as-a-Service: Technology that collaborates with you as a partner This isn’t just a tweak in pricing—it’s a radical upending of commercial models for large SaaS companies. What does this mean for businesses? - Budgeting will evolve: Costs align directly with value received. - ROI becomes clearer: Easier to measure the direct impact of technology investments. - Greater flexibility: Scale usage up or down based on needs without worrying about seat counts. It’s an exciting time, but also a challenging one. Is every SaaS company ready to embrace a model where companies pay directly for the value they receive? At Uniti AI, we’ve been thinking along these lines. We price our AI agents based on the amount of work they do, not on how many seats a company has. I believe this is the future. What do you think? Is the per-seat model on its way out?

Generative AI is going to change the SaaS pricing model - and that’s a good thing. For years, the "per-seat" model has been the go-to for SaaS companies, which tend to grow in tandem with the companies they serve. With the advent of AI-driven efficiency enhancements, however, the landscape of SaaS pricing is undergoing a seismic shift. The conventional wisdom of scaling alongside customer growth no longer holds true in a world where fewer personnel are needed to achieve higher efficiency levels. Consequently, the outdated per-seat model fails to meet the evolving needs of businesses focused on maximizing efficiency. This realization opens doors for founders to innovate their pricing strategies. No longer bound by the constraints of traditional models, entrepreneurs are embracing the freedom to experiment with new approaches that better align with the value they provide to customers. In this evolving landscape, it’s my opinion that value-based pricing will emerge as the North Star. By tethering pricing to tangible outcomes such as cost savings and customer satisfaction metrics (e.g. CSAT score for customer support interactions), businesses can establish a more equitable exchange of value with their clientele. This customer-centric approach fosters stronger partnerships and ensures that pricing reflects the true impact of the service provided. In essence, companies now have the ability to shift their pricing structure to whatever model makes it easiest for their customers to buy in. And with Generative AI, we have the means to make these solutions more creative and impactful than ever before. By prioritizing customer needs and business objectives, founders can differentiate themselves in a crowded market and solidify their position as industry leaders.

I thought there’d be a consensus on how to monetize AI by now. I was (mostly) wrong. With your help, I've spent the past three months investigating what's actually happening in SaaS & AI monetization -- not just what's making headlines. And I've collected data from more than 240 software companies. I'm so excited to finally release the findings. See for yourself here: https://lnkd.in/ePsQJT6X Six takeaways from the new Tremont | Growth Unhinged State of B2B Monetization report: 1. Seats & flat-rate pricing are increasingly under threat. The rise of AI, and AI agents in particular, means value gets decoupled from customers needing to buy more seats. And the costs of delivering AI means software companies need a mechanism to protect themselves if & when AI usage spikes. 2. As AI continues to gain traction, hybrid has become the ‘it’ pricing model. Seats and flat-rate pricing are being replaced by hybrid pricing, i.e. combinations of subscriptions and usage. Hybrid pricing is up from 27% to 41% adoption (!) in the last 12 months. Software and AI are becoming inseparable. More than half of survey respondents said they include AI capabilities as part of their core software product offering. 3. There are a seemingly infinite number of ways to structure hybrid pricing. Choose wisely (or support multiple models). Software founders used to tell me their pricing was inspired by Salesforce or maybe Slack. Now they tell me they were inspired by Clay. Clay's hybrid model has multiple routes to expand customers while keeping pricing (relatively) simple: more features (subscription packages) and more usage (credits). 4. Outcome-based pricing is seen as the 'holy grail'. It's still out of reach for 95% of the market. A mere 5% said their pricing model is outcome-based right now. But 25% said they expect to have outcome-based pricing by 2028. 5. The shift toward pricing transparency seemed inevitable. This isn’t playing out. My two cents: many software companies, especially early-stage and AI companies, don't have pricing totally figured out. And as soon as they publish pricing, it gets way harder to adjust. 6. Pricing models keep evolving. Most of the market is unprepared to keep up. Be careful to avoid pricing ‘no-man’s land’ -- this happens between $5-20M ARR when ownership often falls through the cracks. --- Hope you enjoy the report. THANK YOU for your support 🙏 - Kyle PS, the full report is available at the link above. No need to comment “pricing” for it, but you’re welcome to if you want 😭 #pricing #ai #monetization

SaaS pricing is shifting from selling seats to selling outcomes. I've been talking about this since March, and the noise is only getting louder. Last month, Sarah Tavel from Benchmark pointed out in her post “Sell Work, Not Software”, that we’re moving from selling software to selling work. This creates blue ocean opportunities by focusing on real value and outcomes, not arbitrary metrics like headcount. Jamin Ball from Altimeter said the same thing in his post, “Is Seat-based Pricing Dead?”. It's about reflecting the value we deliver, not just the number of seats sold. If our solution works as intended, you should achieve your goals without needing to hire more people, right? So, why is this happening now? Two reasons: Post-ZIRP Era: Layoffs are becoming the norm. Fewer seats are sold, and the ecosystem feeds on itself. SaaS companies, early adopters of tech, are feeling the pinch as there are fewer people to sell to, leading to reduced revenue. AI: Companies are leveraging AI to become more efficient, reducing the need for additional headcount. Instead of hiring more, they're implementing AI to optimize operations. The old way of pricing fails to align value with cost. Each seat no longer correlates to the value a company derives. Many companies end up cannibalizing their business model as AI promises to do more with fewer resources. As we rethink our pricing models to reflect the value we deliver, the focus should be on outcomes and results, not just the number of seats we fill.

"We only make money if we win for you." That is ultimately what you want any vendor or partner to strive for, and what is the promise of "outcome-based pricing". At Forethought we care a lot about being Customer-Obsessed, so much so that we launched a new pricing model 6 months ago where we charge primarily for "resolutions": where you pay if our AI agent can solve an issue for you, end-to-end, without needing a human touch. I think this is the future, not just for AI in customer service, but for all businesses. Because Generative AI -- especially when backed by an Agentic Reasoning Engine like Autoflows -- can resolve issues end-to-end, businesses no longer should be paying "per seat" fees for the bulk of their software. They should pay the AI for the job it's doing... in our case, resolving Customer Service issues. This will mean a *fundamental* shift in our software is built and priced in the AI-era. Just like the shift from desktop to cloud gave birth to "SaaS" (software-as-a-service) as a subscription model, the shift from systems of record (databases, crms, etc.) to systems of intelligence (gen AI) will see the rise of outcome-based pricing as the primary business model. There will always be a place for some amount of subscription. For example, at Forethought we include a basic "platform fee" that gives you access to the intangibles that are harder to measure but deliver undeniable impact: like access to Discover (generative AI insights and recommendations), allowing our model to be fine-tuned on your own data, and enterprise grade security controls. But at the end of the day, the bulk of the value gets aligned to resolutions, or the "outcome" you are paying for. And when you have the best tech in the market (like we do at Forethought), it certainly shows. From what I can tell, I think shoutouts are due to Intercom and Eoghan McCabe for being among the first to have any form of outcome-based pricing last year. Then it was us at Forethought 6 months ago. And more recently Zendesk just announced their own hybrid form of outcome-based pricing this past week. Thanks to Jon Victor at The Information for writing this awesome article on the future of AI Business Models, and thanks for the mention of Forethought! #ai #genai #agentic #customerservice #customersupport #consumption #business #pricing #cx https://lnkd.in/gYr9JUYt

Before the iPhone came out, carriers used to make money by selling minutes. After the iPhone? They started making money selling data. Here's the big problem with selling minutes: there's only 1440 minutes in a day. You're capped on how much you can make from a customer. But charging for data consumption? It's limitless. This is the big shift happening in SaaS today. Seat-based pricing is capped. With companies shrinking workforces, this makes for an even worse pricing model than carriers charging for minutes. So what's the big shift? Charging based on outcomes. This is what I learned about during my walk with Manny Medina now the Founder and CEO of Paid where they help SaaS companies set up billing systems for AI Agents. SaaS Companies are now looking at four distinct new pricing models as they build on Paid: 1) FTE Replacement Model. Price per Agent. 2) Consumption Model. Price per Action. 3) Process Automation Model. Price per Workflow. 4) Results-Based Model. Price per Outcome. If you're deploying Agents for your customers, you should definitely check Manny's new company Paid out so you're properly architected to bill and get out of the Seat-based pricing model. And no, this isn't a sponsored post. I just thoroughly enjoyed our walk and our conversation and I think he's got the right unique insight for this big shift that's happening. If you're not yet building AI-Agents, if you're still thinking about how to properly leverage AI inside of your aging SaaS platform, I dig more into the Death of the Seat-based Pricing Model on this week's edition of The GTM Lever. You can read it here 👇 https://lnkd.in/gKMNtn46

Our most underestimated pricing strategy? Subscription models. It’s tempting to think pricing is just about one-time sales, but subscription models are rewriting the rules. They’re more than a trend—they’re a strategy for sustained growth and loyalty. Here’s why subscription models matter: → Predictable Revenue Steady, recurring income helps businesses plan better and weather market fluctuations. → Stronger Customer Bonds Subscriptions aren’t just transactions—they build relationships. Convenience, value, and personalization create loyalty. → Tiered Flexibility Different customers, different needs. Tiered plans let businesses cater to everyone—from budget-conscious shoppers to premium buyers. What about dynamic pricing? It’s another game-changer. Static pricing is out. Real-time adjustments are in. → Real-Time Adjustments Dynamic pricing powered by AI reacts to market shifts, competitor moves, and customer demand instantly. → Data-Powered Decisions AI sifts through trends, behaviors, and sales data to find optimal price points—no guesswork required. → Market Responsiveness Inflation or demand spikes? Proactive price changes keep you competitive without alienating customers. So, how do you stay ahead? 👉 Leverage Technology: Adopt AI tools to fine-tune your pricing and uncover opportunities. 👉 Stay Flexible: Pricing isn’t static—test, learn, and adapt as markets evolve. 👉 Prioritize Value: Show customers why your pricing reflects the value you provide. Subscription models and dynamic pricing aren’t just innovations—they’re the future of profitability and customer loyalty. What’s your strategy for embracing these trends? Let’s dive into it!

Consumption Pricing is not just about driving growth; it’s necessary for survival in 2025. CFOs are cutting SaaS spending like never before. The average number of SaaS applications companies use is trending down (see below), and the average overall SaaS spend has dropped even faster. The thing CFOs hate most is unused licenses. According to SaaS Management firm Zylo, 53% of SaaS licenses go unused each month. That’s astounding and unsustainable. In their most recent survey, “Seven in ten respondents said that reducing [SaaS license] waste is their top SaaS management priority” this year. Unused licenses occur for various reasons. Sometimes, underutilization is due to a poor initial estimate of users, slow implementation, weak training, or simply a clunky app that’s hard to use. However, other, more mundane things like employee turnover or position changes also cause significant underutilization. Do you know which applications have zero underutilization? Those with 100% consumption pricing. A company may be using an application less than it should, but it never pays for an application it is not using. When it comes to renewal time, there is a long list of unused SaaS products on the chopping block ahead of yours. Consumption pricing is also advantageous when securing a new booking in this environment. Customers are pushing to lower their commitment levels and maintain flexibility. According to the same Zylo data, SaaS contract durations have decreased over the past two years. Consumption pricing is naturally lower in commitment and fits perfectly into this trend.

Pricing and packaging is, IMO, the most underutilized, highest leverage tactic available to founders to make an impact on sales. At Gigya, we started with $10K ACVs and 5 years later were at $250K ACVs, largely due to improvements in pricing and packaging. Unfortunately, there is not much out there on the right way to approach pricing / packaging. Further, AI-based software, especially AI agents & teammates, are disrupting the old models. Specifically, the usual 'per seat' SaaS pricing model is no longer quite relevant when the software is doing alot of the work humans used to do. To help, I've outlined 5 core pricing & packaging pillars for (AI) startups: 1. Platform Pricing (flat or tiered) 2. Seat-Based Pricing (familiar, but can punish success if AI replaces seats) 3. Consumption-Based (pay-as-you-go, works well with AI compute) 4. Add on Pricing (A la carte features, with big upsell potential) 5. Outcome-Based (ultimate alignment, but hard to measure + forecast) Key takeaway: Think about how your product delivers ROI - then tie your model to that. It's probably going to be using a combination of these pricing strategies. Keep in mind what approaches are most likely to maximize value capture upfront (average contract value) and over time (net dollar retention). As a rule of thumb, aim for net dollar retention in the 120-140% to be best in class. Would love to hear your take - what's working (or not) in pricing, especially in this new AI software world?

SaaS ≠ Per Seat Pricing I see a lot of “SaaS is dead” posts, but really, what’s dying is the per-seat pricing model. SaaS is alive and well and will continue to be the software delivery method of choice for a while. Everything you’ve learned about SaaS is still useful: - CI/CD - Scalability - Multi-Tenancy - Focus on user experience - A subscription revenue model But you do have to evolve how you price, which means also how you sell and go to market. The old per-seat model was ok in the Zirp era of hyper-growth at all costs when money was free but that won't fly anymore. Your customers scrutinize every expense, and it just doesn’t make sense to pay for something you don’t use. So please consider switching to outcome-based pricing: Hyperscalers and infra players price this way. API products have been sold this way. Snowflake has been doing it. It just makes sense and aligns the vendor’s and customer’s interests. Now, it won't be an easy switch and it’s a pain to forecast, more so than per-seat pricing. But it is the right thing to do, especially if you also want to prepare your business for consumption by AI Agents. Let me know in the comments if you’ve used usage- or outcome-based pricing and what challenges you’ve encountered.