Software ate the world. Now AI is eating software.
As this transformation accelerates, one of the most fundamental business models in tech is becoming obsolete right before our eyes. The per-seat SaaS pricing model that dominated the last decade simply doesn’t work in an AI-powered world.
The math no longer adds up. The incentives are misaligned. The value exchange is broken.
Let me explain why this matters and what comes next.
When Fewer Seats Create More Value
The traditional SaaS model was built on a simple premise: more users equals more revenue. Companies paid for each “seat” or user license, creating a predictable growth model where expanding headcount directly correlated with expanding software costs.
AI fundamentally inverts this equation.
With AI-powered tools, organizations can now accomplish significantly more with fewer people. One person equipped with the right AI capabilities might replace the output of three or four traditional roles. Teams shrink while output grows.
This creates an immediate conflict: companies using AI tools are actively working to reduce their headcount while increasing productivity. Meanwhile, software vendors charging per seat are financially incentivized for customers to add more users, not fewer.
The collision between these opposing forces is inevitable.
The SMB Opportunity
This misalignment becomes even more problematic when we consider the massive opportunity AI presents for small and medium-sized businesses.
SMBs have long suffered from a critical disadvantage: their teams spend disproportionate time on administrative tasks rather than revenue-generating activities. A typical small business owner might dedicate 40% of their time to paperwork, scheduling, and other necessary but non-growth activities.
AI can dramatically shift this equation, handling routine tasks while freeing up human capital for high-value work. But if we continue with per-seat pricing, we create a perverse incentive where software vendors are rewarded when their customers fail to achieve maximum efficiency.
This isn’t sustainable.
From Seats to Outcomes
The solution requires a fundamental rethinking of how we price software. Instead of charging for access, we need to charge for outcomes.
Value-as-a-Service (VaaS) represents this new paradigm. Under this model, pricing aligns with measurable business results rather than arbitrary user counts. The more value a customer receives, the more the vendor earns. True alignment.
This shift requires sophisticated tracking of outcomes and a deep understanding of what customers truly value. For service businesses, this might mean pricing based on revenue processed, clients acquired, or time saved. For manufacturers, it could be production efficiency or error reduction.
The specifics will vary by industry, but the principle remains consistent: align costs with actual benefits received.
Reimagining the Value Exchange
This transformation won’t happen overnight. Legacy systems, accounting practices, and procurement processes are all built around the per-seat model. Change will require education, experimentation, and evidence.
But companies that make this shift early will gain significant advantages. They’ll attract customers who understand the true ROI of their solutions. They’ll build deeper partnerships based on shared success. And they’ll create defensible positions in markets increasingly crowded with AI-powered alternatives.
For customers, the benefits are equally compelling. They can scale usage without worrying about unpredictable license costs. They can optimize for maximum efficiency rather than managing seat counts. And they can confidently invest in AI solutions knowing costs will remain proportional to value received.
The Future Is Already Here
This isn’t just theoretical. Forward-thinking companies are already implementing outcome-based pricing models with remarkable success. We’re seeing usage-based components, success fees, and value-sharing arrangements replacing rigid per-seat structures.
The companies that thrive in the AI era will be those that recognize this fundamental shift and adapt accordingly. They’ll create pricing models that grow as their customers succeed, not as their headcounts expand.
The per-seat pricing model served us well in the early SaaS era. But as AI transforms how we work, we need new models that reflect the changing reality of value creation.
The businesses that understand this shift won’t just survive the AI revolution. They’ll lead it.