April 29, 2026

Why Usage-Based Pricing Won’t Work For SaaS Businesses

There’s a lot of speculation in the SaaS space about switching from per-seat pricing to usage-based pricing for apps that have lots of AI features.

I think this sort of usage-based pricing only works when the billing amounts are so small that the customer’s perceived value far exceeds what they have to pay, even in a high-usage month.

But as soon as a customer receives a monthly bill with a price that is close to or exceeds the value they received, they’ll start considering their options.

Yours,

—J

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