Ep. 161 - Is User-Based Pricing Dead? How AI Is Reshaping SaaS Monetization

SaaS Backwards - Reverse Engineering SaaS Success

Guest: James D. Wilton, Founder & Managing Partner of Monevate

The advent of AI is forcing a complete rethink of traditional SaaS pricing—particularly the long-standing dominance of user-based pricing.

In this episode, pricing strategist James Wilton explains why AI-native products are undermining the foundations of per-seat pricing models.

Unlike traditional SaaS, where users are the proxy for value, AI tools often perform tasks autonomously, disconnecting cost from usage in unpredictable ways.

As a result, the most value-aligned and sustainable pricing approach for AI-powered platforms is shifting toward usage-based models.

Wilton argues: "If you’re still defaulting to user-based pricing, you’d better be ready to defend it."

📌 Other Takeaways:

• Misaligned Incentives in AI Pricing
  With AI, the metric that drives cost (compute) is often not the same as the metric that reflects customer value—creating tension between profitability and value-based pricing.
• The Rise of Usage-Based Pricing
  As automation and AI reduce the need for additional users, user-based pricing loses its relevance. Usage-based models offer better alignment with customer value and revenue scalability.
• Customer Expectations Are Changing
  Enterprises prioritize cost predictability. Even in AI-native environments, buyers want fixed pricing or capped usage tiers to maintain budget certainty.
• Real-World Example: Help Scout’s Pivot
  Wilton shares a case study on Help Scout’s move from per-user to “contacts helped” pricing. The shift improved customer satisfaction, better aligned with value delivered, and even offered greater revenue predictability.

📚 James Wilton’s Book:
Capturing Value: The Definitive Guide to Transforming SaaS Pricing
Get the blueprint for designing pricing that drives both growth and profitability without shortchanging strategy.

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