AI as an Unlock for B2B Pricing

🌈 Abstract

The article discusses the challenges and evolution of B2B product pricing and packaging, particularly in the context of the growing impact of AI technology. It explores insights from the author's experiences, as well as perspectives from industry experts like Aaron Levie and Scott Belsky, on how AI is transforming the way businesses think about pricing and value delivery.

🙋 Q&A

[01] Pricing Challenges in B2B

1. What are the key challenges around pricing in the B2B space?

• Pricing and packaging is a complex domain that sits between product, finance, and go-to-market teams, leading to conflicting priorities and challenges.
• Changing pricing can solve problems for one set of customers while creating issues for others, leading to operational overhead and challenges for account and success teams.
• There is a difference in how buyers perceive value based on whether the product is in the critical path of their workflow or just helping with productivity.

2. What is the author's key learning from discussions with Aaron Levie on pricing?

• The perception and expectations of buyers change as the product gets closer to the "path of revenue" - if the product is helping with productivity, the buyer looks to the vendor to translate that into a pricing model, but if the product is in the critical path of the workflow, the buyer evaluates the value solely in terms of the lift to their overall business metric.

[02] The Impact of AI on Pricing

1. How does the author see AI impacting B2B product pricing and packaging?

• AI agents can unconstrain the number of people doing a job, which challenges the traditional per-seat pricing model that has dominated B2B SaaS.
• AI can help reimagine business processes and workflows, moving the focus from just improving productivity to directly impacting the core business outcomes.
• This shift allows for more value-based pricing, where the pricing is based on the tangible value generated for the customer, rather than the internal employee tasks.

2. What are the potential implications of this shift in pricing models?

• Value-based pricing enabled by AI can first emerge in the downmarket, as it helps "unconstrain small businesses and under-resourced teams", allowing them to scale without growing their workforce.
• As smaller companies modernize with an AI-native stack, they can compete with larger enterprises, leading to the "era of scaling without growing" described by Scott Belsky.

3. What are the author's key takeaways on the impact of AI on B2B product pricing?

• If AI can get the B2B product closer to the critical-path, revenue-generating workflow of the customer, then the vendor can potentially charge a percentage of the business growth they enable, moving towards a more value-based pricing model.
• This shift in pricing approach can unlock new markets and categories of software, as AI enables otherwise niche products to become much larger.