


19 Oct 2026 · 32m · 11 chapters

How SaaS pricing is changing for AI—whether to price by seats, credits, or agent outcomes; why outcome-based pricing often fails; and how hybrid subscription + usage models work.
Rob Litterst, co-founder of Pricing SaaS (SaaS and AI monetization). Former ProfitWell pricing strategist; previously a BDR and sales rep at HubSpot.
Customers usually want predictable “seats,” not outcome-based pricing. Credits function as a “company currency” that balances flexibility (vendor cost control) with predictability (bundled allowances), especially for broad “platform” products. As offerings become specific “solutions,” buyers prefer paying for defined outcomes rather than credits. AI agents introduce a spectrum from cheap rote tasks (bundle) to labor-like “computer use” (price closer to labor).
DeepSeek (cheap rote tasks); Astra/“computer use” (agentic browser takeover); Figma (seat-based + layered AI); Intercom and chargebacks/contingency fees as outcome-based examples; Xerox-per-printed-page as an “outcome” analogy.
Written by AI. May contain mistakes.
Explore the disconnect between pricing strategies and customer desires.
“In the pricing space, people are always thinking about what pricing strategy makes sense for the company, right?”
Rob shares his transition from SaaS sales to pricing strategy.
“I'll take that as a compliment because I also read all of your newsletters and I feel like you're one of the clearest thinkers in this space.”
A discussion on the definitions and implications of value metrics vs. pricing metrics.
“It is okay to sacrifice a few beers for a future.”
Insights on how AI is reshaping pricing models and strategies.
“So before I hit record, you and I started chatting and, oh my God, we could just go on for forever on this.”
Exploration of credits as a pricing currency and their implications for buyers and sellers.
“So you bring up two different topics that I'd really like, that I think about a lot and I'd love to hear your opinion or thoughts about.”
Learn about the benefits and challenges of using credits in SaaS pricing models.
“But I think at least for the next year, like credits still seem to be like a pretty safe space.”
Discover the hybrid pricing model and its implications in SaaS.
“And the closer you get to a solution, buyers don't want credits.”
Explore the complexities of outcome-based pricing and its challenges.
“Yeah, it feels like it helps both the buyer and the seller at this point in time for a model like that.”
Hear key insights on pricing fundamentals and the importance of adaptability.
“You know, the other one I started thinking about today and I'm not 100 % sure that I'm there yet, but that is who's taking the risk.”
Learn how model routing can significantly impact product profitability.
“The other side of me thinks like, I've been thinking a lot about like the inference providers and this idea of like routing underneath the hood and like being able to pick the right model for the right job.”
Discover why understanding buyer personas is essential for effective pricing strategies.
“So yeah, two different answers, but those would be kind of like the two ways that I would probably push somebody.”

Get the gist, explore an idea or ask about something said.
On Impact Pricing, what are the key points of this episode?
Automatic transcript. May contain errors.
0:00In the pricing space, people are always thinking about what pricing strategy makes sense for the company, right? I think so few people think about what customers actually want and how they actually want to buy. And people were so gung-ho about outcome-based pricing and outcome-based pricing being so customer-friendly because, you know, it's like helping you do these things. But then I think a bunch of companies have tried to go to market with outcome-based pricing and found out their customers just have no interest in it. Like, they don't want it. They just want to pay for a seat. Coffee's for closers on.
0:33So we've established my proposal to stand in principle. Now we're just haggling over price. Let's see how much we're going for an eBay. It's the same as Dunkin' Donuts. It costs 15 times the price.
0:47Today's podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike. If you're looking for a new pricing role, or if you're trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast. Welcome to Impact Pricing. I'm Mark Stiving. I help companies win more business at higher margins by teaching them how buyers think about value and price. Our guest today is Rob Litterst.
1:24Here are three things you want to know about Rob before we start. He is the co-founder of Pricing SaaS, focused on SaaS and AI monetization. He was former ProfitWell pricing strategist who worked with many, many SaaS companies there. And I subscribe to all of Rob's content and find him to be an amazingly clear thinker, probably because he thinks like me. Welcome, Rob. I love that. I'll take that as a compliment because I also read all of your newsletters and I feel like you're one of the clearest thinkers in this space. So I will definitely take that as a high compliment. Yeah. Hey, so how did you get into pricing?
2:01So I was in SaaS for about seven years before I stumbled into pricing and I started in SaaS as a BDR at HubSpot, was in sales there for about four years. And like little beknownst to me at the time, like kind of learned what it's like to sell when your pricing model makes sense, right? And like when you have a solid pricing and packaging strategy. And then I left HubSpot after about four years there and went to a couple of startups and saw what happens when that's not the case, when you either don't really have pricing totally figured out or you kind of go through the second startup I went to, went through like a big pricing change where they basically tried to like reverse engineer a value metric, but like when they didn't actually have like usage-based pricing in the beginning.
2:43And I just saw how hard that was to talk to existing customers about, you know, like you were spending$40 on this. Now you have to spend 4 ,000. Those conversations don't go well, typically. It's not at all. No matter how you try to talk about value, it's really, really hard to make those conversations work. So it was, I was getting to the point where I was kind of like ready to move into something new. And an old friend led people ops at ProfitWell, and she reached out to see if I wanted to join the sales team. I took a look at the company and saw that they had a listing for strategists and was like, you know what?
3:16I'm like kind of trying to like pivot out of sales. I'd be really interested in the strategist role. And like from the get go, like the interview process, like I just knew I had to work there. I was just like so excited about what they were doing. I was watching pricing page teardown, learning all like learning words for all these things that I'd seen in my life as a SaaS sales rep and had like experienced like the word value metric. Like I had no idea what that meant before getting interviewed there. And so I went through that process and just realized like, I need to work here. I need to get this job.
3:47And so I, I remember I, my last interview was right before my bachelor party and I was flying out to, we went to Portland, Oregon for my bachelor party and I was sitting next to my brother-in-law and I was writing these thank you notes to all the people that I interviewed with. They had like a very elaborate interview process. I think I probably interviewed with like 10 people on that day. And so I tried to send like a very specific thank you to literally every single person that I talked to. And it took the entire flight. My brother-in-law was like trying to order beers and stuff. He was like, dude, what's going on?
4:15Like, can't we have some fun? Like, this is crazy. And I just wanted it so bad that I just spent the entire flight sending thank yous. And literally after they offered the job, they were like, the thank you notes are what did it. So I snuck in the door with thank you notes and fell in love with pricing right away. And after about a year there, started my newsletter, Good Better Best. And that kind of set me down the path of like pricing content. It is okay to sacrifice a few beers for a future. Exactly. A hundred percent. So I told you I might disagree with you. And so you just brought up the first thing I want to disagree with you on.
4:47Awesome. Yeah. I had Patrick Campbell on the podcast many years ago. He was amazing. Loved it. And I actually told him the same thing I'm about to tell you. Yeah. I hate the fact that you guys use the word value metric. I hate it. So I think what you describe should be called a pricing metric. It's what I call it all the time. And I think of a value metric is how a customer perceives value. And a pricing metric is what we charge for. So I just thought I would throw that out there and just say how much it annoys me that you guys made that so popular. I think it's one of the most contentious terms like in the pricing community because like I've definitely heard other people say, no, that's a pricing metric.
5:28Like that's not a value metric. Honestly, I don't have like a super strong rebuttal. It's just like in my head, it's a value metric at this point. So I have this weird thing where like, like the main metric that anchors a price, like a pricing strategy, I will call the value metric. And then like other kind of like usage based components underneath the surface, I will call like pricing metric. So like even in my head, it does, it's like not totally clear, which goes against you saying that I'm one of the clearer thinkers in the space. Like I make a mess of one of the simplest metrics that there is, but I'm open to either.
6:00So yeah, I respect it. But all of our listeners just heard my opinion really strongly. We'll drop it. Okay. So before I hit record, you and I started chatting and, oh my God, we could just go on for forever on this. But let's talk about AI. And it feels like pricing of AI is just changing every week, or at least my thoughts are changing every week on this stuff. What are you seeing? What do you think the big changes are and what AI is driving for us? Yeah. So I think what's like super interesting, like, so I think credit models were kind of like, actually, I think like AI add-ons were kind of like the first wave that we started to see is like people would like kind of package this new like AI functionality as an add-on.
6:44Then we started seeing a lot of companies start bundling their AI features into kind of like their core plans. And then from there, we started to see like these credit models start to emerge where it's like you get this allocation of like 200 credits a month with the pro plan, 500 with enterprise or whatever it is. And that's starting to kind of like take off quite a bit. And now I think everybody's still curious about credit models. But what we're starting to see now is we're starting to see like actual agents emerge on pricing pages and like almost kind of like blend in with the existing plans.
7:14And we're starting to see like new features that are part of that. So like think about like skills and routines. And I think like more broadly, something that we've seen since all of this started happening is that like all the functionality that starts on the ChatGPT pricing page and the Anthropic pricing page makes its way down to the app layer and is just kind of like built on top of from whoever it is, like if it's HubSpot or Notion or whatever it is, like they're building their own version of deep research, of skills, of routines or whatever it might be. And so I think like what's really interesting to me like right now in this moment is this kind of like variance between the kind of like simple repetitive tasks that an agent can do and the super hard, like almost human-like tasks that an agent can do and figuring out like how to price those two extremes.
8:07Like I think that's really hard and I think it's like, like last week I wrote about how DeepSeek has this model now that's like super, super cheap and it can do all of these like kind of rote tasks really quickly, really easily and really cheaply. And then Astra came out last week from ChatGPT and it has this like amazing computer use functionality. I've been trying to use, do like the computer use thing with Claude's Chrome extension. And like for anybody listening who hasn't like seen it or used it, it's basically like the computer using or the AI product, like using your computer the way that you would, like logging into an app and doing things or like taking over your browser and doing things.
8:43And so I used to try to do this with Claude's Chrome extension and it just, it was super clunky and slow and like not great. And I haven't used it within Astra yet, but all the feedback is that it's like incredible and very fast. and so like some people are likening it to like what agentic coding meant for engineers computer use could mean for like all these other functional disciplines right like marketing or sales or whatever it might be it's like if you could code through clodder whatever now if you have computer use through astra it's like it can take over all of these like account research or like putting together like a marketing campaign or whatever it might be and so that sort of stuff like that's sort of functionality I think that's priced closer to labor, whereas the deep seek stuff we were talking about earlier is almost so cheap that you could just bundle it into your product.
9:32And so I think it's going to be really interesting to see how companies kind of grapple with that tension, like just the sheer breadth of like what AI can do now and the differing price points along that spectrum. Yeah. So you bring up two different topics that I'd really like, that I think about a lot and I'd love to hear your opinion or thoughts about. First one I want to bring up is credits. Yeah. So you brought up credits, and let me share my opinion of credits and tell me that I'm totally wrong. Yeah. I think credits are simply a company currency. Yeah. Yeah. There's nothing magical about it other than I'm going to give a customer to give me$10 ,000, and then I'm going to tell them how they can spend it in my company store.
10:09I think that's 100 % right. Yeah. I think that's the best way to think about it, for sure. Okay. It's like a video game. Yeah, like video game or company currency, exactly. Yeah, and so people... use credits for several different reasons, but one of which is we're not really clear on what our value is. As the seller, we're not. And by the way, as the buyer, we're not really clear what the value is. And things are moving so fast that we don't know what the value is going to be like tomorrow. Right. I think that's totally right. I think like credits are great when people can do a lot of different things with your product and it's really hard to pin down like exactly what people are going to do with your product.
10:48Right. So like if you like let's say it's notion just to bring one up so it's like if you are using notion as kind of like a repository for knowledge management you know maybe credits consume like a certain amount of like database fields or something like that right but if you're using notion for like content creation and you want notion to like plug into your content tools and like pipe your content back and forth like maybe that's a different type of currency and notion such like a kind of broad horizontal product that like not using credits and like specifying like how many of each of those metrics go into each plan or whatever it might be like you could land in an area where your plans just like don't really make sense for people but i think credits kind of give you that flexibility with the predictability of like knowing what that kind of top level subscription looks like and that's why they've gotten so just the sheer breadth of what ai can do i think is why they've gotten so popular right and it allows notion to control their costs right to not get blown away by costs.
11:47Exactly. Exactly. Yeah. Okay. So we're on sync there. Now I'm going to give you the next one. And that is the difference between a platform and a solution. Yeah. And so I would argue that what you just talked about with Notion is it's a platform because we can do so many different things and solve so many different problems. And yet, as soon as we find an agent that solves a specific problem, now I can put a price on it. Right. I actually know what the value is of that thing and I can charge you money instead of credits or some ethereal something. Right. I think that's totally right. Yeah. Okay.
12:21Got it. And so are credits going to be around for a long time or are they going to go away? So like, this is, this is like what I'm trying to think about too. Like, I think in the pricing space, people are always thinking about like what pricing strategy makes sense for the company, right? I think so few people think about what customers actually want and how they actually want to buy. And I honestly think like, like people were so gung ho about outcome based pricing and outcome based pricing being so customer friendly, because you're like, you know, it's like helping you do these things. But then I think a bunch of companies have tried to go to market with outcome based pricing and found out their customers just have no interest in it.
13:03Like they don't want it. They just want to charge, they want to pay for a seat. And so I think similarly, like we're probably no like we're probably not even at like peak credits yet like i think more companies will move towards credits and i think if that becomes kind of like the prevailing strategy that buyers are used to and companies are doing it in a way where you know it's not super confusing and like buyers can actually figure it out i think more buyers are going to want credits because they're going to be used to using them but that assumes that like companies are using ai the same way that they are now in the future where like, I do think there's a world where more companies kind of like let their customers bring in their own models.
13:46And then that kind of like makes credits unnecessary to a certain extent, I think. So I don't know, like my, my first answer is I do think credits are going to be around for the next like year or so. I would say, I think like I'm going further than a year. I feel kind of, I feel like I'm just setting myself up to be, to look like an idiot. But I think at least for the next year, like credits still seem to be like a pretty safe space. And I like, like you mentioned, credits kind of protect the vendor because they make sure that they can keep their margins intact. They also protect the buyer because there's kind of like this platform fee-esque license and then a certain amount of credits bundled underneath it.
14:24So there's the same predictability on the buyer side that I think CFO is really like with some flexibility underneath the hood on how you can actually use the product. So I do like, I know credits have gotten a lot of heat because like I was talking to a pricing leader a couple of weeks ago and she said they have a 45 page internal FAQ for their credit model. So it's like that sort of stuff I think drives people crazy because it's like, who has time to read a 45 page credit model FAQ? Your AI? Yeah, exactly. Exactly. Claude. Claude has plenty of time. So true. But I do think like at the end of the day, it is a great model for both like vendor and customer because it kind of straddles that line with flexibility and predictability.
15:06Okay. I like your answer, but I'm going to give you mine if that's fair. I love it. Yeah. So my answer is credits will be around forever for the platforms. Okay. Right. Right. And the closer you get to a solution, buyers don't want credits. I'd rather pay money than have a credit. Yeah. Right. I want to know what I'm buying. And so I think people that are selling solutions, that's going to move away from credits. Okay. So like the more defined the outcome, the less likely you are to have credits. Yeah. I like that. I think that's, so I wrote something and I phrased it horribly. And like somebody wrote in when I published this newsletter, like, dude, you shouldn't have named it this.
15:43You should have named it something else. And they were right. But I think that's totally right. I think the more horizontal the solution, the better fit credits are. The more specific your solution, the more specific the pain points you're solving, the more specific the outcomes that you're generating, the easier it is to price on a consistent outcome and prove that out. So I totally agree with you on that. I'm sorry to keep agreeing with you, Mark, but you're right. Just tell my wife, okay? Okay. So there's a, there's one common pricing model that seems to be really popping up. And I just want to hear you talk about it for a minute.
16:21And that is, we'll call it a hybrid model. And it's really, I'm going to pay a subscription, whether it's per seat or per agent or per something. And then I'm going to pay for usage on top of that once I exceed some number. And so are you pushing that model? What do you think of that model? so i think like i think it makes sense i think like the situation that a lot of these companies are in is they have this seat-based model and they so first and foremost from like a data perspective within pricing sass we're seeing very few companies totally get rid of their seat-based model and i think a lot of it comes back to what we were talking about earlier where customers like seats and like they don't want to go from seats to fully credits or fully consumption or whatever that is.
17:06They generally like seats and they can predict seats and they kind of understand the model. So I think a lot of companies are basically tacking on, like you said, kind of like a credit layer on top of their seat-based license. I don't really have a problem with it. I think I like the idea of having kind of like base level credit allowances within your existing seats, because it makes it really easy for companies to test out your AI features and see what works, see what they want to use and then ultimately buy more over time. I think like, I don't know if that's like where everything will land down the road.
17:43I think like it can be kind of annoying, like have to buy credit packs and have to like continuous, like, like another thing that we've seen is the longer companies offer credits, the more likely they are to offer like rollovers and top ups and like basically have like a lot of flexibility around their credit currency. And I think it's just literally, and like, I've talked to a few companies who have offered credits for a while. And I think it's literally just customers complaining and they're like, all right, we have to do this or we're just going to keep on getting complaints. And so I think either companies are going to like move towards flexibility with their credit models, or there could be something else.
18:19I know Agent Force has a really flexible model that I'm not sure I totally understand, but I think you basically have a lump fee where you can allocate some budget to seats, some budget to agents, some budget to credits, like there's just a lot of flexibility in there. And I don't know, I've yet to like really talk to anybody about that and whether or not they really like it. But this model right now where you're layering credits on top of kind of like licenses and kind of like using that for expansion, I think makes a lot of sense. Like I think it kind of keeps current customer relationships intact.
18:52It's like not a huge, you know, it's not, it doesn't feel like super disruptive to customers who have been paying you a certain way for a long time like a company like figma like figma has been doing this and like they have this kind of crazy seat-based model where they have like a bunch of different seats and then they have like layers of ai that you can add on top of that and it seems to be working really well for them and like i think one thing that's interesting about the credit expansion is i generally think like the credit expansion is really only happening like in the enterprise like i don't think there are a lot of like smb customers that are like paying a ton for like extra credit packs and stuff like that like that's not the sense that i get and like from figma's earnings it seemed like the companies who are really like just flying through ai usage are all their bigger customers and i think at that level probably just makes sense for them to eventually have like an enterprise agreement right where they just like talk to them and like about their renewal about like hey we need to lock you in at like this credit tier or whatever because you're blowing through your limits so So yeah, I think that was a long-winded way of saying that I generally like the model.
19:52I think it's a good model for where we're at right now with AI. Yeah, it feels like it helps both the buyer and the seller at this point in time for a model like that. So let me tell you how I think about some of these. And I don't think I've gotten any of my clients to agree with this thinking yet. So it tells you it's not that good. But imagine that I'm selling just subscriptions, flat rates for a second. And as a company, as a seller, I think of that as insurance. meaning that I've got a whole bunch of people barely using it and I've got a few people using it a ton and yet everybody worries about the few people using it a ton it's like I'm losing money on these customers I gotta stop it but as long as we're making money overall who cares?
20:35Yeah, I think that makes sense Yeah But I can't get CFOs to agree with me It's funny the insurance analogy have you been following this thread of like ai native services at all and like this kind of okay so there's there's this guy jake saper who is a venture capitalist at this firm called emergence and they've been kind of touting this narrative of like ai native services companies where basically it's like it's kind of like how people used to say like services as software like basically like that same kind of idea but ultimately like what i think he's driving at is just like these are services companies who his thesis is basically saying like some SaaS companies should actually pivot to like services companies where they're actually doing a job for their customers and then they can charge for the outcome that they're providing and their pricing will basically be kind of like an insurance policy it's like we will help you resolve all of your customer support tickets whether we use an agent or we use humans like that is like what we do that is our job that we will do for you and then you can charge a premium basically because you're actually doing this for them and you as like a services company you're able to do this with ai either faster cheaper or better than you could before and so that's kind of like the idea but it's funny you're the insurance policy analogy reminded me of that i think i generally agree yeah it's just it makes sense to me makes sense to me so um let's talk about outcome-based pricing So this was the holy grail.
22:10Everybody talks about it, thinks it's going to be amazing. And yet there's a handful of companies who actually get away with it. Yeah. Why? So I think, first of all, like you need to have like you and your customer need to agree on what an outcome is. You need to be able to actually do it. Right. So if you're the vendor, it's like you need to agree with your customers that this is the desired outcome. You need to build something that can actually do it. You need to be able to prove that you did it. So there's the whole attribution piece. And I think a lot of people kind of think attribution is the hardest challenge here.
22:45Because especially with some outcomes, once you get outside of support tickets, sometimes it's hard to tell how much of an impact. If you've ever gotten into the marketing world with attribution and stuff like that, which I'm sure you have at some point or another. like attribution is such a like black box. Before you want to kind of give you my favorite example of attribution. Yes. So as pricing people, we work really hard. We make pricing model changes. We make price level changes. We grow ASP in the company. We go to the CEO and say, hey, look, we grew the ASP. And the VP of sales says, no, no, no, no, no.
23:17We did that. Yep. Right. Marketing is no, no, no. We did that. Right. Totally. Totally. Exactly. Everybody's fighting for their bag. Exactly. Right. Right. That's the attribution problem right there. A hundred percent. A hundred percent. Okay. And then even if you crack attribution, then your customers need to agree to pay for outcomes. And that's the last piece too that we talked about earlier is like your customers need to be down to pay for outcomes. And I think like there are just so many stumbling blocks across those four things. And there are probably like many other things that kind of stand in the way.
23:52to your point earlier like i think the companies who are selling a solution that does the same thing over and over like trying to think of a good example besides intercom and finn but the other one i use often is charge flow for chargebacks totally totally that's a great example and like i don't know what they charge but i would imagine they charge like a percentage of what was saved or something like that yeah so like totally and i think that makes total sense i think like intercom is dovetailing into sales now. And so like they're helping you generate leads or qualified leads and like helping you set up like sales meetings, which like that makes sense.
24:31Like that I think is an interesting one because it's like you could pay a certain amount per like sales meeting or per lead. But I feel like as a vendor, there's a world where you're like way undercharging. Like if you're actually helping them generate like a lead for an enterprise contract, like there could be a pretty big delta between the value that they're getting and what you're actually collecting. So yeah, I think like a lot of those things are standing in the way. Probably the biggest one is just like buyers like not really being ready. Like that to me is kind of like the big one is I don't think buyers are really ready for outcome-based pricing right now.
25:04Yeah. You know, the other one I started thinking about today and I'm not 100 % sure that I'm there yet, but that is who's taking the risk. Yeah. Right. And so if you think about Intercom, right, they're taking the risk that says, are we going to be able to solve this or not? And if we can't, we don't get paid for it. Yeah. By the way, my other favorite example of outcome-based pricing is contingency fees for lawyers. Yes. Right. I think lawyers have generally nailed any, like I think they've been on top of pricing for a long time. I'm talking to a few lawyers about things right now and yeah, they have pricing nailed in a way that I do not for myself.
25:43And yeah. Yeah, some of them do. Some of them do. So this whole outcome thing is really fascinating to me because, you know, I got in a LinkedIn discussion the other day about what the definition of an outcome price was. Yeah. Right. And it's really fascinating. And the example that I came up with that I really enjoy is imagine that you're Xerox charging per printed page. Yeah. Right. So that's certainly not what we would consider outcome for me. But if I were selling it to a print shop, that is precisely outcome. Right. Right. Yeah. Yeah. It's funny. Somebody asked me, cause I was talking about outcome-based pricing.
26:19I think I might've posted something a little while back and I think it was Kareem from Zoom, who's on the pricing team at Zoom. He was like, would you call this an outcome or an output? And I think that gets really blurry too. Cause like an output, like if an output is like a completed workflow or something, like, couldn't you also call that an outcome? Like it's one of those things where it just like, it gets like very, like you get into the weeds a little bit with just like how you're even explaining these things. Yeah. But yeah, that's interesting. So the definition I'm leaning towards is exactly what you just said, the difference between an output and an outcome.
26:52An outcome is an output, but it's closer to what the customer actually cares about. I like that. Right, it's either a KPI that drives profit or a KPI that they're really measuring today, something they really care about. I like that a lot. Yeah, that makes sense. So, but, you know, these things are changing constantly. way. What I write this week is going to be because I thought something different than what I thought last week. Yeah. Yeah. A hundred percent. That's where I'm at right now is like, I don't know what I'm going to write about until I see the news for the current week. And things change so fast that it's just like an ever, ever evolving thing.
27:31Yeah. Rob, I'm having a blast, but we're going to run out of time. Let me ask you the final question and we'll see if this promised me to ask even more, but what's, what's one piece of pricing advice you'd give our listeners that you think could have a big impact on their business? So like, I think it still pays off and like makes sense to just like know the fundamentals of pricing and packaging and just like to understand those concepts. I think like part of me would recommend like going back and like reading all the books that are worth reading on that front and like really getting familiar with that stuff.
28:06The other side of me thinks like, I've been thinking a lot about like the inference providers and this idea of like routing underneath the hood and like being able to pick the right model for the right job. And like, I don't even know if price it like within a given company, like I don't necessarily know that those would be like the pricing folks who are super focused on that more so like the product folks, but I think those worlds are blending. And I think that's a really interesting place to focus too like if you really know where the models are going and where they're capable and what they can do i think that can have a huge impact on your end product like how much profit you're actually driving from your product and i think like the like you could have two different companies who are doing the exact same thing and one could just be way better at routing to different models and have like a way better grip on like what the models are capable of and they could make way more profit for that same workflow than their competitor just because of how how they understand like the underlying models and how to route those and how to figure that whole thing out so like that's another thing that i've been thinking about a lot that's not so much pricing but more of like product underneath the hood i think like i think that's a really really good place to concentrate and it's like the open router acquisition from stripe i think like that didn't really surprise like that makes a lot of sense to me like now looking at kind of like what they're doing there with OpenRouter and Metronome and this world of like crazy usage-based pricing where like the tokens are going to be kind of like the underlying currency.
29:42So yeah, two different answers, but those would be kind of like the two ways that I would probably push somebody. You know, it's funny because when I read a lot of what you write, a lot of what Ulrich writes, it often goes back to, well, what's the segmentation? What's the packaging, right? Who are you selling this to? and then you resonate with them. And so most people don't get the pricing fundamentals. And here we are trying to deal with the nuances. Right. No, it's so true. And when I was at ProfitWell, we had like a, ProfitWell was a great place to learn. I would say we didn't have like the most sophisticated consulting offering, but it was kind of like a productized consulting experience that allowed you to train people up pretty quickly on it and like charge a lower fee than most consultants.
30:29and kind of churn through engagements and deliver like pretty solid recommendations. But we would always start with a buyer persona sprint. So we had this sequence. So it'd go like buyer persona, pricing structure, which is where we dig into like pricing metrics and stuff like that. Packaging, where we would dig into like how to actually package a product and then price points, which would be like the final cherry on top of like, how, like where should you actually price these plans? And I think without the persona sprint, nothing else makes sense. Like you need to understand who the people are that land in each of those tiers.
30:58and like how your buyers are different. So I completely agree with you. I think like segmentation is like the fundamental first job of like understanding like how to price and package. Rob, this has been an absolute blast. Thank you so much for all your time. Thanks for having me. If anybody wants to contact you, how can they do that? The easiest way is probably on LinkedIn. I'm just Rob Litterst on LinkedIn. It's L-I-T-T-E-R-S-T. And I post way too much. So sorry if it becomes a bombardment. But yeah, I would love to connect on there. It's well worth reading. Thank you. Excellent. And to our listeners, if you enjoyed this, would you please leave us a rating and a review?
31:39And if you have any questions about this podcast or about pricing in general, feel free to email me, mark at impactpricing.com. Now, go make an impact. Thanks again to Jennings Executive Search for sponsoring our podcast. If you're looking to hire someone in pricing, I suggest you contact someone who knows pricing people. Contact Jennings Executive Search.
What happens when AI changes what software can do faster than companies can figure out how to charge for it?
Rob Litterst is co-founder of Pricing SaaS, focused on SaaS pricing and AI monetization, and a former pricing strategist at ProfitWell. His work explores how software companies price, package, and monetize products as AI changes the value they deliver.
In this episode, Rob and Mark Stiving unpack the shift from seat-based subscriptions to credits, usage-based pricing, AI agents, and outcome-based models. They explore why customers may still prefer familiar pricing, when credits make sense, and why pricing should start with buyer segmentation rather than the latest trend.
Why You Have to Check Out Today's Podcast:
"The more specific your solution, the more specific the pain points you're solving, the more specific the outcomes that you're generating, the easier it is to price on a consistent outcome and kind of, like, prove that out."
— Rob Litterst
Topics Covered:
01:00 – How Rob Found His Way Into Pricing. From SaaS sales at HubSpot to startups and ProfitWell, Rob explains how pricing and packaging shaped his experience.
04:30 – Value Metrics vs. Pricing Metrics. Mark and Rob debate the terminology and the difference between what customers perceive as value and what a company charges for.
09:30 – Are Credits Just Company Currency? Why credits can help broad platforms support different use cases while keeping subscription costs predictable.
12:00 – Platforms vs. Solutions: When Credits Make Sense. The more specific the problem and outcome, the easier it may be to price a solution directly rather than through credits.
16:00 – Why Hybrid Pricing Is Taking Off. How companies combine seats and credit allowances to introduce AI while preserving familiar customer relationships.
18:30 – Can AI-Native Services Charge for Outcomes? The conversation explores software companies that use AI to deliver a job or service and price around the result.
20:30 – Why Outcome-Based Pricing Is So Hard. Customers and vendors must agree on the outcome, the vendor must deliver it, and the impact must be proven and attributed.
26:00 – The Hidden Profit Advantage of AI. Rob explains how selecting and routing to the right AI model for each task could improve product economics.
28:30 – Why Buyer Segmentation Comes First. Rob shares the ProfitWell sequence: buyer persona, pricing structure, packaging, and then price points.
31:00 – The Pricing Fundamentals That Still Matter. Why knowing the buyer and understanding pricing fundamentals remain essential even as AI changes the market.
Key Takeaways:
"Customers just want to pay for a seat." – Rob Litterst
"Credits can offer flexibility for broad platforms, but buyers may prefer direct pricing when the solution and outcome are clear." – Rob Litterst
"I think a bunch of companies have tried to go to market with outcome-based pricing and found out that their customers just have no interest in it. Like, they don't want it. They just wanna pay for a seat." – Rob Litterst
Connect with Rob Litterst:
LinkedIn: https://www.linkedin.com/in/roblitterst/
Connect with Mark Stiving: