from Hacker News

Is seat-based pricing dead?

by madmax108 on 6/17/24, 7:15 AM with 6 comments

• by eskibars on 6/19/24, 3:39 AM

  Seat-based pricing isn't dead, but it's on life support, though it has nothing to do with AI now or realistically in the future.

  Consumption based pricing is becoming/already the norm for 2 reasons. As a SaaS operator, my storage/compute/etc costs tend to go up with your usage. If I can bill by the metrics that affect my cost, then:

  1. It feels more fair to the buyer (pay for what you use) and

  2. Investors and finance folks like it because I can build a pricing model with consistent gross margins

  This whole thing is hinged on the multitenant SaaS model generally though, and it being so prominent. For example, if I ship self-managed software, I no longer genefally incur hardware usage costs (except my support costs probably go up roughly linearly to usage).

  AI doesn't affect any of this reasoning.

• by tadfisher on 6/19/24, 3:31 AM

  Sometimes your product's value is derived from how much time each user saves using your tool. In that case, charging per-seat aligns incentives for both parties.

  If Zendesk charged per-message or per-issue, then the incentive for the customer is to use the product less, creating less value for both parties. They would be eaten by a product that charges per-seat and optimizes for efficiency.

  AI pushes the equation toward a local maximum, but it's a fallacy to assume it will reduce the number of seats for which you can charge.

• by GiorgioG on 6/19/24, 3:08 AM

  This is just some drivel from yet another VC touting AI will change everything. Fuck off already.