Software Companies Abandon 'Per-Seat' Pricing as AI Takes Hold

The traditional pricing model of 'per-seat' licensing is facing a significant shift in the software industry. This model, which ties revenue growth to the number of users or licenses sold, has been prevalent since the 1960s and 1970s.

However, companies like HubSpot and Salesforce are now offering hybrid pricing models that tie revenue to work done rather than the number of users. For example, HubSpot's new model offers seats for people who use the platform, as well as credits for the work its AI agents perform.

This shift is significant because it allows companies to charge for outcomes rather than just the number of licenses sold. This can be particularly beneficial for businesses that help customers do the same work with fewer people, such as those using AI-powered tools.

The implications of this shift are far-reaching and affect not only vendors but also boards and finance teams. Companies need to rethink their cost structure and move from fixed license fees to variable costs that behave like cloud bills.