S3E2 - The Death of Seat Based SaaS

Seat-based SaaS pricing helped fuel the software boom for more than a decade. But that model is starting to show cracks. In this episode of The Pricing Guys, Michael and Avy unpack why many technology companies are moving away from traditional seat-based subscriptions and exploring usage-based or hybrid pricing models. Ironically, the same industry that popularized subscription pricing is now leading the shift away from it. AI is a major driver. As companies automate work and reduce headcount, the number of seats they need for tools like development platforms, HR systems, and productivity software is shrinking. That creates real pressure on SaaS revenue models that were built around charging per user. The conversation digs into what companies are doing in response. Should they move fully to usage-based pricing? Should they combine fixed and variable components? And how do they ensure the pricing metric actually grows with the customer rather than encouraging behaviors that reduce revenue? Michael and Avy also explore one of the most overlooked issues in pricing design: expandability. The best pricing metrics encourage customers to naturally use more of the product over time. The wrong metrics can do the opposite, pushing customers to game the system or limit usage. They also discuss why simplicity matters. Many companies introduce too many pricing metrics, which confuses both customers and their own sales teams. Seat-based pricing may not be dead, but it is clearly evolving. The challenge for SaaS companies now is designing models that reflect real customer value while remaining simple, scalable, and aligned with how products are actually used.   Learn more - revenueml.com