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

One of the hottest topics in AI for B2B is around outcome-based pricing.

I worry it’s the cart driving the horse.

What do I mean?  Simply that outcome based pricing may be exciting to VCs who think it unlocks more TAM and budget, and it may seem exciting to founders and execs who think it will help them grow deal size.

But at the end of the day, 99% of us have to use proven, organic price points:

• Payments vendors can charge per transaction for many reasons, but part of the reason is this is standard practice.  It’s how Stripe, Adyen, Visa, Mastercard, everyone charges.
• CRM vendors can charge per seat because that’s what the markets also expect.  This is why HubSpot and Salesforce are sticking with it for their core CRM offerings.
• Now one thing is clear: in certain categories, all the leading vendors are pushing toward outcome-based pricing for AI offerings.

And many AI costs in B2B SaaS are falling close to zero.

Salesforce, Zendesk, Intercom, Gorgias, and just about everyone is charging, or trying to charge, $1-$3 per outcome-based resolution.  Solving that trouble ticket.

I’m not saying it’s not interesting and great — if the customers want to pay this way.  But I’m not sure it changes the game as much as folks think.  And it’s interesting HubSpot isn’t charing this way.  And Box mostly stopped charging.  They aren’t sure it’s really worth charging more to make their core products better with AI.  More on that with our deep dive with HubSpot’s chair and co-founder Brian Halligan here:

I have one investment at SaaStr Fund where an outcome-based deal is crossing $1m a year.  What happened?  The customer quickly moved to a fixed contact.

And with AI costs falling rapidly, will outcome-based pricing really stick in a lot of categories?

I don’t know.  What I do know is a pricing model is not a product.  And a pricing model doesn’t make a mediocre product great.

Pricing is important.  But at the end of the day, you mostly replicate what’s proven and what works in your category and industry.

That’s the least friction and easiest way to close the deal.  Most of us should innovate on product, not on pricing.

If outcome-based pricing works in your space, and breaks out, use it.  If not, maybe don’t.  It may not be as revolutionary as people on LinkedIn and X and VCs think.