The Real Question for Outcome-Based Pricing Is If It Will Stick

One of many hottest subjects in AI for B2B is round outcome-based pricing.

I fear it’s the cart driving the horse.

What do I imply?  Merely that consequence based mostly pricing could also be thrilling to VCs who suppose it unlocks extra TAM and price range, and it could appear thrilling to founders and execs who suppose it should assist them develop deal dimension.

However on the finish of the day, 99% of us have to make use of confirmed, natural worth factors:

• Funds distributors can cost per transaction for a lot of causes, however a part of the reason being that is customary apply.  It’s how Stripe, Adyen, Visa, Mastercard, everybody fees.
• CRM distributors can cost per seat as a result of that’s what the markets additionally anticipate.  That is why HubSpot and Salesforce are sticking with it for his or her core CRM choices.
• Now one factor is evident: in sure classes, all of the main distributors are pushing towards outcome-based pricing for AI choices.

And lots of AI prices in B2B SaaS are falling near zero.

Salesforce, Zendesk, Intercom, Gorgias, and nearly everyone seems to be charging, or making an attempt to cost, $1-$3 per outcome-based decision.  Fixing that bother ticket.

I’m not saying it’s not fascinating and nice — if the shoppers wish to pay this fashion.  However I’m unsure it adjustments the sport as a lot as people suppose.  And it’s fascinating HubSpot isn’t charing this fashion.  And Field principally stopped charging.  They aren’t certain it’s actually value charging extra to make their core merchandise higher with AI.  Extra on that with our deep dive with HubSpot’s chair and co-founder Brian Halligan right here:

I’ve one funding at SaaStr Fund the place an outcome-based deal is crossing $1m a 12 months.  What occurred?  The shopper rapidly moved to a hard and fast contact.

And with AI prices falling quickly, will outcome-based pricing actually stick in numerous classes?

I don’t know.  What I do know is a pricing mannequin isn’t a product.  And a pricing mannequin doesn’t make a mediocre product nice.

Pricing is vital.  However on the finish of the day, you principally replicate what’s confirmed and what works in your class and business.

That’s the least friction and best approach to shut the deal.  Most of us ought to innovate on product, not on pricing.

If outcome-based pricing works in your house, and breaks out, use it.  If not, perhaps don’t.  It will not be as revolutionary as folks on LinkedIn and X and VCs suppose.