Businesses with seat-based pricing haven’t had to think critically about their products’ usage—until recently. Historically, if customers made the one-time purchase of X seats, the deal was done. But with AI-driven products challenging this traditional SaaS pricing structure, these businesses are facing a critical decision point, where they must adapt to a world of new, value-based pricing structures to compete.
We’re calling it: the time has come for seat-based companies to rethink their monetization strategies if they want to stay competitive.
Recently, Metronome CEO Scott Woody sat down with SaaS pricing expert Kyle Poyar to discuss the future of SaaS pricing. The conversation was wide-ranging, and if you’re a seat-based company considering adopting usage-based pricing, we hope these key takeaways give some insight into why you should consider adopting UBP, the challenges you can expect, and how you can integrate UBP into your current business without a hitch.
Why now’s the time to rethink your pricing model
Software pricing has evolved significantly over the past two decades. Early on, companies sold on-premise software licenses that were purchased like physical goods, where customers paid upfront for access. The late 1990s and early 2000s ushered in SaaS, and companies shifted toward seat-based pricing to monetize access to cloud-hosted platforms.
With AI transforming software’s capabilities, seat-based pricing is becoming less relevant. Companies are moving toward usage- and outcome-based pricing models to align their pricing with the actual value delivered to customers.
AI has also enabled product-led growth (PLG), where customers experience the product before paying for it. With products like ChatGPT, users can try before they even sign up, reinforcing a shift where value must be delivered first, and only afterward can it be monetized. In short, pricing is no longer one-size-fits-all. Instead, it’s evolving into more flexible, customized models that reflect how customers consume and benefit from AI-powered tools.
"When we look at pricing, pricing is a lot more flexible. There’s a lot more variety. It’s not necessarily a shift just from subscriptions to usage-based. It’s actually a shift from subscriptions times seat—and kind of monolithic—pricing models to much more, kind of complex, bespoke customized models." —Kyle Poyar (04:15)
The biggest risks
Moving too quickly
While there’s a real sense of urgency around modernizing pricing and getting it right, rushing pricing changes without a well-thought-out, strategic approach can be dangerous.
The true challenge of any successful pricing transformation is balancing speed with precision. Companies that take too long to act will struggle, while those that are too hasty and skip thorough testing risk alienating customers.
Doing nothing
Moving too quickly is a common enough risk, but the more significant risk, by far, is to simply do nothing.Â
It’s not unusual for companies to hesitate to change their pricing models. There’s a very real fear of the complexity, potential internal misalignment, or customer pushback. But, failing to act is a bigger risk than any misstep that might happen in the process of transforming your pricing.
"Most businesses are very risk averse when it comes to pricing and don’t have a whole lot of in-house expertise or tooling that allows them to be agile with it. So it’s not uncommon for me to talk to a company that’s gone years without making a major pricing change, besides maybe a slight price increase from time to time." —Kyle Poyar (26:15)
Internal debates across executives in finance, product, and marketing can stall intended pricing transformations. But without clear ownership and decisive action, businesses risk losing market share to competitors who are willing to iterate and experiment.
"No one really wanted to stick their neck out to totally transform the business. And it was very hard to pivot within a business that already had an install base where customers were paying a certain amount where they might pay dramatically different amounts, say with usage-based pricing." —Kyle Poyar (26:46)
How to approach a pricing transformation
Use AI as an add-on
A solid option for adding UBP to existing seat-based models is to treat AI as an add-on to existing products. leveraging credit-based models similar to ChatGPT. This lets you test AI monetization without affecting core revenue streams.
"So where I see things going in the short term with more agile businesses is folks looking at monetizing in new ways for an AI-specific offering that they either build themselves or buy. And so that’s what allows them to really test some of these new monetization models without disrupting their install base." —Kyle Poyar (27:00)
Salesforce and Intercom are two strong examples using this add-on model. For these companies, their models charge seat-based fees for what can basically be thought of as platform access, and alongside that flat fee, customers pay usage-based prices for things like API calls or AI-agent support conversation resolutions.Â
- Salesforce: Agentforce is free to existing customers, and then costs $2 per conversation or lead.
- Intercom: Copilot is an optional add-on on a per-seat basis—you might pay for 5 seats, but only add Copilot for 3 of them.
"It’s like the free trials of the 2010s. It’s like, just get access to this stuff. You have some kind of paywall or gate that you eventually hit, and the credits are the kind of way of letting you fungibly try lots of new value while protecting the downside cost to you as a vendor." —Scott Woody (30:18)
Adopt a hybrid model
Another effective approach for seat-based companies first adopting UBP is bundling AI usage within seat-based pricing, and then charging for any consumption that goes over the initially committed amount.
"The other angle that I see is folks looking at more of a hybrid pricing model where they maybe keep their core seat-based subscription where it is and they bundle in a certain amount of AI usage or credits or some sort of outcomes to the customer, and then they can monetize as customers use that amount and want to use more." —Kyle Poyar (27:40)
"The most famous subscription on earth right now is ChatGPT. This is literally how it functions. And what I think is that actually what we’re seeing is a lot of businesses are kind of taking that similar approach so that you basically give your existing customers AI capabilities baked into the existing product." —Scott Woody (30:02)‍
It’s clear that AI is forcing a rethink on seat-based pricing. Those companies that experiment early and iterate quickly will win, while those that hesitate risk falling behind. Introducing UBP to an existing business model is a project that transforms your entire business—not just your pricing.Â
With flexible pricing metrics and a data model that lets you price as you need, Metronome has helped hundreds of companies make the switch to UBP. The insights we’ve gained from that work continues to inform new customers and helps ensure that their transitions to UBP are smooth and successful. If you’re interested in seeing these tools in action, get in touch. Our team would love to help.
Join us for the next session! Register here.
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Hubspot’s VP of Pricing Strategy, Sam Lee, joins Metronome CEO, Scott Woody, to discuss how to know when to make the shift, best practices, and how to avoid common pitfalls.
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