Three in every four software companies changed their pricing or packaging in the last year, according to Growth Unhinged.
If your pricing still looks the way it did in 2024, you’re already behind.
AI is changing how software gets built, sold and valued. Companies grow faster, AI features carry real variable costs and buyers are open to new models. Pricing has become one of the biggest strategic decisions a software company makes.
In our latest York IE State of the Industry webinar, Pricing in the Age of AI, we asked investors and operators what’s actually working.
Matt Shapiro, Vice President of Investments at York IE, moderated a panel that has priced, backed and built software companies from every angle. Panelists included:
- Melanie Nabar, Principal at Volition Capital, who sits on the boards of growth-stage software companies
- Andrew Pearsons, Partner at M33 Growth, where he leads the value creation team and has built pricing and packaging for multiple portfolio companies
- Kyle Hart, CEO of Juicer, a York IE portfolio company building a margin management platform for restaurants. Before Juicer, Kyle helped build ProfitWell and spent four years on new product pricing at Toast.
Key takeaways
- Price to the value you deliver. Seats are one option, and they shouldn’t be your default.
- Let usage prove your value. Pair a platform fee with usage to lock in a floor and leave room to grow.
- Test outcome-based pricing where you can prove results. Keep a fixed-price option for customers who want predictability.
- Build your moat. Niche expertise and proprietary data beat general-purpose AI.
- Price for your best customers. Talk willingness to pay early, and keep the model simple enough to explain in two minutes.
1. Price to the value you actually deliver
The core of the pricing playbook still holds. Andrew described the job as understanding how you deliver value, how customers perceive it and “at what point in the workflow do they kind of have that economic trigger.” Find that moment, then pick the metric that matches it.
What has changed is the default. For years, seats were the automatic starting point. Andrew put it bluntly:
“I think seat-based pricing has been dead for a very long time. A lot of software companies, they just held on to it. And it’s because the seats had absolutely nothing to do with how you were delivering value to your customers.”
Seats lasted because customers were used to them and could predict costs. Now that buyers are comfortable with other models, you can price to the value you create. Seats still fit some products. They just shouldn’t be your starting point.
To pressure-test a price, Andrew recommends drawing a pricing triangle. Cost sets the floor. Competitors shape the ceiling. Customer value sits at the top, and your goal is to get as close to it as you can.
2. Usage-based revenue is becoming a proof point for value
Companies are scaling faster than ever, and that changes how usage-based revenue is interpreted. Melanie explained:
“Investors used to think of usage-based pricing as higher risk, lower revenue quality, because it could fluctuate. And now I actually view it as a positive, because I can get behind an earlier company and say, yeah, people are using it. They’re using it more and more, they’re spending more and more, and you can see it in the numbers.”
Repeatability is what makes it work. Andrew noted that a consistent, forecastable band of usage builds far more confidence than a single peak month.
That’s why hybrid models kept coming up. A platform fee locks in a revenue floor, and a usage component captures the upside. Kyle called that combination “the sweet spot,” as long as it stays simple enough to sell. The market agrees: 37% of companies in the Growth Unhinged survey now run a hybrid model.
3. Outcome-based pricing is still taking shape
Andrew defined outcome-based pricing as pricing tied to “a discrete action or endpoint or outcome,” no matter how much work it took to get there. It’s attractive to both sides, in theory.
It works best where results are easy to prove, like return on ad spend in advertising technology. Everywhere else, attribution is the challenge. Kyle saw this firsthand at Toast. Did the marketing drive that restaurant order, or did the customer just want some Bojangles?
The smart move is optionality. Offer outcome-based pricing to customers who are ready for it, and a fixed price to those who value predictability. You won’t be alone: 29% of companies now let customers choose between multiple pricing models, up from 21% the year before, according to Growth Unhinged. Whatever you choose, run Kyle’s gut check:
“If the complexity is beyond what I can explain in a two-minute description of our pricing, then I think it needs more work.”
4. Niche expertise and proprietary data are the moat
What separates an enduring AI company from one that fizzles out? Melanie started with an admission: “I don’t agree with my own view from six months ago.” Today, she points to speed to market, early lighthouse logos and proprietary data that gets more valuable as more customers use it.
Andrew added that your data should be mission-critical, not “an ML that sits on top of somebody else’s data.” Your value proposition should need AI to work.
Kyle hears the same question at every industry convention:
“I can do that with Claude, or why don’t I just do that with Claude?”
His answer: go deep on a niche. The companies that last are “really focused in on a specific niche and are nailing that niche,” with AI working behind the scenes so customers simply get better results.
5. Price for the customers you want to grow with
Pricing is also a lever for focus. Melanie shared a scenario. Your SMB customers pay $20K but churn quickly. Your best customers pay $40K or more and stick around. A higher price floor keeps your sales team focused on the accounts that grow. “Don’t just try to service all customers,” she said.
Andrew closed with advice for anyone launching AI features: talk about willingness to pay up front. Giving features away and charging later creates friction. Set expectations early about the value you’ll deliver and what it’s worth once proven.
Your pricing is never finished
The companies getting pricing right stay close to their customers.
They price to the value they deliver, keep the model simple enough to sell and revisit it as the market moves. Three in four software companies changed their pricing or packaging last year. Yours belongs on the agenda too.
The fundamentals still work. Know your costs, your competitors and exactly where customers see value. Then build a model your team can explain with confidence.
Want the full conversation? Watch the Pricing in the Age of AI replay to hear the panel in their own words. Ready to rethink your own pricing? Talk to our team.
