Investors Pushing Startups Toward Outcome-Based Pricing Amid User-Based Model Challenges

·May 06, 2026 04:08 PM·

What's interesting is that investors are pushing startups to do more outcome based pricing, which I've seen the same challenges around Garrick v.. There's a lot of pushback on user based pricing right now, with the belief that workforces are shrinking due to AI, so user based pricing will lead to churn, not expansion. Curious if anybody else is hearing the same and how they're getting creative with their pricing models.

9 comments

· Sorted by Oldest

Garrick v.
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Ryan B. yes, all my client work in 2025 was helping shift away from user-based pricing for exactly the reason you describe - SaaS companies can't hit revenue goals on seat-based pricing if their customers are reducing headcount. I wrote about that here: https://garrickvanburen.com/seat-pocalypse-not-saaspocalypse/
Ryan B.
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Read through. Good article.
Retyan A.
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hi Ryan B. interesting take. wondering if, given the scenario that this phenomenon will cause to churn, how do you think currently company approaches this so that they can prevent it from churning?
Garrick v.
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Retyan A. it's less about customer churn, and more about falling ACV with no ability to grow it to reach revenue goals.
Ryan B.
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It's both IMO. Customers who scale back HC bc of AI are going to reduce contract sizes and this is not something a CS team can protect against. Ways to potentially prevent are packaging by feature sets instead of seats, charging access fees per team instead of per account, unlimited licenses… there's probably more ways, but if your pricing per seat in a world where everyone's getting pressured to do more with less, it makes retention more difficult.
Ryan B.
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I.e. for us, where we build an account planning software, we're pricing by the number of accounts a customer can build a plan on. Not perfect, but just sharing as an example of non-seat pricing.
Retyan A.
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(edited)·
Ryan B. Customers who scale back HC bc of AI are going to reduce contract sizes and this is not something a CS team can protect against --> what if there is an AI tool that could easily tell the CS team what to do before cust reducing contract size? do you think it's possible? like you could integrate all the data from cust support ticket, cust calls, etc, and get the AI to analyze the potential of the customer would turn into churn, then give you exact suggestion to move forward before they literally turn into churn Garrick v. falling ACV with no ability to grow it to reach revenue goals --> can we also see this as limitation for dashboard? in terms of they cannot tell which account at risk, going quiet, and ready to expand? or its diff case
Ryan B.
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Retyan A. There are plenty of CS tools that do this, but this can't impact things that are going on inside the customers business. If the customer is looking to reduce HC to cut costs, there's no play a CSM is going to run that can realistically effect that, if the contract is also based on HC.
Ryan B.
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Other than move them do a different product/contract type.
👍1

Garrick v.
·
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Ryan B. yes, all my client work in 2025 was helping shift away from user-based pricing for exactly the reason you describe - SaaS companies can't hit revenue goals on seat-based pricing if their customers are reducing headcount. I wrote about that here: https://garrickvanburen.com/seat-pocalypse-not-saaspocalypse/
Ryan B.
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Read through. Good article.
Retyan A.
·
·
hi Ryan B. interesting take. wondering if, given the scenario that this phenomenon will cause to churn, how do you think currently company approaches this so that they can prevent it from churning?
Garrick v.
·
·
Retyan A. it's less about customer churn, and more about falling ACV with no ability to grow it to reach revenue goals.
Ryan B.
·
·
It's both IMO. Customers who scale back HC bc of AI are going to reduce contract sizes and this is not something a CS team can protect against. Ways to potentially prevent are packaging by feature sets instead of seats, charging access fees per team instead of per account, unlimited licenses… there's probably more ways, but if your pricing per seat in a world where everyone's getting pressured to do more with less, it makes retention more difficult.
Ryan B.
·
·
I.e. for us, where we build an account planning software, we're pricing by the number of accounts a customer can build a plan on. Not perfect, but just sharing as an example of non-seat pricing.
Retyan A.
·
(edited)·
Ryan B. Customers who scale back HC bc of AI are going to reduce contract sizes and this is not something a CS team can protect against --> what if there is an AI tool that could easily tell the CS team what to do before cust reducing contract size? do you think it's possible? like you could integrate all the data from cust support ticket, cust calls, etc, and get the AI to analyze the potential of the customer would turn into churn, then give you exact suggestion to move forward before they literally turn into churn Garrick v. falling ACV with no ability to grow it to reach revenue goals --> can we also see this as limitation for dashboard? in terms of they cannot tell which account at risk, going quiet, and ready to expand? or its diff case
Ryan B.
·
·
Retyan A. There are plenty of CS tools that do this, but this can't impact things that are going on inside the customers business. If the customer is looking to reduce HC to cut costs, there's no play a CSM is going to run that can realistically effect that, if the contract is also based on HC.
Ryan B.
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·
Other than move them do a different product/contract type.
👍1