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The Revenue Formula
From seats to outcomes: How AI is changing pricing (with Kyle Poyar)
Dec 19, 2024
Kyle Poyar, a pricing expert and creator of growthunhinged.com, sheds light on the rapidly changing landscape of pricing models due to AI. He discusses the shift from traditional seat-based subscriptions to outcome-based pricing strategies that align with customer value. Poyar also shares insights on the challenges facing incumbents and the pivotal role of leadership in navigating these changes. Alongside predictions for 2025, he emphasizes the importance of adaptability in pricing to stay competitive in an AI-driven market.
45:32
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Quick takeaways
- AI advancements are driving a shift from traditional seat-based pricing models to innovative outcome-based structures that reflect customer success.
- Organizations face challenges in redefining pricing strategies and compensations to align incentives with ongoing customer value in an AI-driven landscape.
Deep dives
The Evolution of Pricing Models with AI
Traditional pricing models in the software industry have experienced significant disruption due to advancements in AI technology. Companies are now moving away from standard seat-based pricing to more innovative structures that better reflect the value delivered through AI capabilities. For example, Intercom's introduction of a pricing model that charges based on the number of support tickets resolved autonomously highlights how organizations are shifting towards outcome-based pricing. This model not only aligns costs directly with the benefits provided but also encourages a focus on customer success as a core revenue driver.
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