

Game Changers in Generative AI w/ Hg’s David Toms
31 snips Dec 10, 2024
David Toms, Head of Research at Hg, dives into the transformative power of generative AI in the software industry. He discusses the shift from traditional per-user pricing to dynamic models based on customer value and usage. Toms highlights the complexities of results-based pricing through an insightful case study, emphasizing the need for profitability alongside value alignment. He also advocates for fostering competition and collaboration among portfolio companies, showcasing how benchmarking can enhance operational efficiencies.
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Software Pricing Evolution
- Per-user, per-month pricing for software is becoming obsolete.
- Value-based and usage-based models are gaining traction, aligning price with actual customer value.
Pricing Model Pitfalls
- A payroll software company's revenue decreased after releasing a better product.
- Their old per-payslip pricing model penalized errors, which the improved software eliminated.
Scaling New Features
- Test new software features in smaller markets before widespread rollout.
- This minimizes risk and provides valuable feedback for refinement.