Two big ideas for your weekend.
First, I want to highlight “The Evolution of SaaS Pricing in the AI Era.” Integrating AI into SaaS platforms challenges the traditional seat-based pricing model, as AI automates tasks requiring multiple user licenses. Emerging pricing models such as work/usage-based and outcome-based pricing are gaining traction, focusing on the actual work performed by AI rather than the number of users. While established companies may continue using seat-based pricing with added components, startups can leverage innovative pricing strategies to differentiate themselves and capitalize on AI’s capabilities.
Second, I want to remind listeners of what the discussion around outsourcing sounds like to customers, so Information Week’s “Key Steps for Launching Your IT Outsourcing Partnership” got my attention. To successfully launch an IT outsourcing partnership, CIOs should define mutual goals, determine the scope of services, and establish service-level expectations. A well-structured transition plan is essential, including a robust management process and clear communication. Securing the right talent involves competitive acquisition, defining roles, and monitoring performance. Sustaining success requires fostering a collaborative culture, setting KPIs, and recognizing the value delivered by the outsourced provider.
Why do we care?
Thinking like your customer is solid advice, so this is a reminder that this is the structure a customer looks for.
I want to linger more on SaaS pricing evolution. While I’m not advocating for a change to IT service providers – it’s too early for that – I am highlighting that pricing models around usage may become more of a prominent trend. It certainly exists in cloud computing and makes even more sense when the usage costs are as high as they are for AI. All-you-can-eat AI is incredibly challenging, so expect more usage costs. That may be incompatible with your per-user or per-device pricing, and if your vendors increasingly use this model, you’ll be forced to adjust.
Heads up.