Clouded Judgement: Is Seat-Based Pricing Dead?
The article argues that AI will fundamentally disrupt SaaS seat-based pricing models by enabling customers to do "more with less" (people), forcing application software companies to transition toward consumption-based pricing similar to infrastructure vendors. The author predicts that leading application software companies will increasingly resemble database platforms, with AI agents consuming APIs and data structures rather than UIs, and that data infrastructure companies will become the primary application providers in an AI-driven future.
Metrics in this report
4.25percent
Market rate as of June 14, 2024 (lowest since March)
53months
median
All public SaaS companies
14percent
median
All public SaaS companies
15percent of revenue
median
All public SaaS companies
76percent
median
All public SaaS companies
17percent
median
All public SaaS companies
3.4percent
U.S. inflation ex-food and energy, May 2024 vs expectations of 3.5%
3.3percent
U.S. inflation, May 2024 vs expectations of 3.4%
12percent
median
All public SaaS companies
110percent
median
All public SaaS companies
10percent
median
All public SaaS companies
25percent of revenue
median
All public SaaS companies
5.1x
median
All public SaaS companies measured as of June 2024
7.9x
median
SaaS companies with projected NTM growth > 27%
3.5x
median
SaaS companies with projected NTM growth < 15%
7.9x
median
SaaS companies with projected NTM growth 15-27%
40percent of revenue
median
All public SaaS companies
14.1x
median
Top 5 public SaaS companies by market cap