🚀 How to choose a pricing model? (Part 2)

3 tactics to choose a pricing model

🛠️ Usage-based pricing

• Loved by forward-thinking customers for flexibility and paying only for what gets used but not so much by traditional ones:

  • Unpredictable bills and hard-to-forecast spend

  • Not all usage results in ROI for the customer

  • Customers might self-police their usage, hurting long-term growth

  • There’s not always a clear usage metric that correlates with value

  • Small errors and accidental AI usage (especially with agentic workflows) can easily turn into massive bills

• Biggest impact comes from making usage the north star KPI, not pricing tweaks:

  • Train sales to forecast usage upfront and tie those projections directly to customer ROI

  • Lead with your strongest ROI use case before expanding into adjacent areas

  • Shift sales compensation and incentives away from upfront initial spend, to actual usage and realized revenue 

  • Provide admins with in-app usage visibility and control over spend at both account and user levels

  • Offer usage-based subscriptions that add predictability like annual drawdowns (prepaid credits) or adaptive flat rates (waived overages but rates adjust at renewal)

💸 Hybrid pricing

• Hybrid pricing (typically seat + usage-based) is becoming more common, but:

  • There’s often way too much complexity as there are infinite ways to structure; hard to calculate or understand costs and difficult to manage internally (quoting, billing, UX, etc.)

  • It can feel like a bait-and-switch

•  Simplify pricing wherever possible starting with these:

  • Introduce an unified credits model instead of multiple usage metrics that could all risk overages

  • Cut the number of actions that cost credits to ease billing worries and make your product feel simpler to use

  • Offer segment-specific bundles (e.g. Pipefy, offers SMBs fixed pricing with up to 90% off for 11–200 employees)

📊 Outcome-based pricing

• Outcome-based pricing, especially for AI agents, is getting interest but 95% of the market is still not adopting it

• It feels like the ultimate win-win where customers pay only for real business impact, but it is viewed as unpredictability squared (unpredictable usage metric AND unpredictable success rate):

  • Measuring outcomes feels impossible

  • Customers fight over the bill, relitigating every “outcome” you charge for

  • It’s impossible to estimate outcomes upfront

  • You don’t get credit for anything beyond one specific outcome

• Optimize for consistency, attribution, measurability, and predictability:

  • Consistency: Do all customers value the same outcomes? Or do outcomes need to be customized, leading to a proliferation of bespoke contracts?

  • Attribution: Can you convince customers to give your product credit for delivering the outcome? Or do they believe they drove the outcome, with a small assist from you?

  • Measurability: Can you measure and report on the outcomes in real-time? Or do you require customer reporting, A/B testing and/or a proof of concept?

  • Predictability: Can you predict the outcomes your product will achieve with some level of accuracy? Or do outcomes vary significantly from customer to customer?

• Use outcome-based pricing in your marketing without relying on it for 100% of revenue:

  • Align upfront on outcome definitions and success measurement

  • Shift to softer outcome-based pricing in the form of a performance guarantee (usually with credits or refund $ if the performance isn’t met)

  • Introduce a platform fee with a smaller outcome-based bonus to make it feel affordable and show value beyond a single outcome

  • Let customers choose between outcome-based or an alternative pricing model while highlighting which is more common (e.g Decagon)

2 traps to avoid

🚨 Blindly publishing pricing for transparency

• Publishing pricing when you don't have pricing totally figured out yet makes future adjustments much harder without confusing customers

• Buyers want human interaction for complex pricing (AI credits, hybrid plans, usage limits, extra features, overages, etc.) and don't trust what they see on a website 

• Put pricing online only for product led growth (PLG) offerings or when average annual contract value (ACV) is less than $5,000

🚨 Letting pricing fall into “no-man’s land”

• Pricing is increasingly becoming a strategic (and complex) decision and needs to be resourced appropriately to understand costs, competitors and customer value

• Ensure ownership does not fall through the cracks; pricing is usually the founders/CEO decision early on, but gets passed around across Sales, Product, Marketing, Finance, and Operations over time

1 tool to leverage

📖 Best practice on pricing

• Costs of delivering AI capabilities are becoming a key input into pricing; gross margins have fallen from 80%+ for traditional SaaS to under 60% for AI products

• Leverage tools like Vendr to get pricing benchmarks and see how much others are paying

Bonus: 1 trend to spark startup ideas

📈 Oceans and maritime infrastructure is the invisible backbone of modern economies

• Subsea communications cables carry 99% of all internet traffic, 80% of trade moves by sea; offshore wind is a $1T opportunity over the next 20 years 

• Oil & gas remains the largest ocean-based industry, with deepwater oil and gas production set to increase by 60% by 2030

• Maritime risks are multiplying: 

  • Geopolitical conflict at multiple maritime frontlines (South China Sea, Middle East, Europe)

  • Latent risks like piracy and illegal fishing persist but disruptive tools (e.g. cable-cutting drones, comms interference, narco-submarines, and state-backed fishing fleets in legal grey zones) are more diverse than ever 

• Defense investment has taken off, but navies won’t be enough; high-impact startup opportunities include:

  • Persistent maritime monitoring: Intelligence, Surveillance, and Reconnaissance (ISR) for commercial infrastructure 

  • Autonomous infrastructure management: Rapid threat detection, predictive maintenance, and fleet coordination

  • Coast guard empowerment: Tools to enhance enforcement, emergency response, and environmental protection