We are likely to see a universal, foundational shift in pricing strategy.
A seismic shift from seat-based to usage-based models.
We've already seen dramatic increases in the number of SaaS companies adopting or experimenting with usage-based pricing.
- In 2019, ~30% of companies were experimenting with usage-based pricing to some degree.
- By 2023, that had grown to 61% with another 21% expecting to test UBP in the next year.
Customers prefer to pay for outcomes, not seats. It's that simple.
The fact that emerging AI tools are able to deliver capabilities DIRECTLY tied to outcomes in measurable ways cements this as the future.
And those outcomes (i.e. the VALUE) will be aligned with cost.
Partial adoption or experimentation with new pricing models is very different from full scale, industry wide adoption. And that's what is coming.
The majority of Rev Ops Leaders we talk to know they aren't ready for the AI tsunami to hit.
The Prime Challenge Moving to Usage
By nature, your end-to-end Quote to Cash process and the underlying technology infrastructure spans more teams than virtually any other single area of the business - not to mention, it's the most mission-critical.
The challenges ahead extend well beyond just CPQ and this sliver of your GTM Tech Stack but let's start there.
CPQ & GTM Systems
Companies already struggle to get CPQ tools implemented and optimized at scale. Too often, they are viewed as just an extension of your CRM instead of an entire Product discipline in itself.
CPQ tooling is the glue that sits squarely between Front Office & Back Office applications.
But getting CPQ and Q2C infrastructure right requires involvement from EVERY team:
- Sales
- Revenue Operations
- Finance
- GTM Systems
- CS & Renewal Strategy
A move to usage-based is a fundamental shift in how we price, sell, bill, and recognize revenue. This shift will require a large scale overhaul on both ends of your systems infrastructure.
For Sales team, it will need to be able to handle things like:
- Predictive usage forecasting for prospects
- In-app notifications for usage thresholds and upsell opportunities
- Real-time ROI calculators based on actual customer usage
- Dynamic discounting tied to usage commitments
- Usage-based customer health scores for renewal strategies
For Finance & Rev Ops teams, it will need to handle:
- Dynamic pricing based on consumption
- Integrated usage metering across various product lines
- Flexible dunning processes for usage-based overages
- Real-time revenue forecasting based on usage trends
- Usage-based sales compensation modeling
- Integration of usage data into lead scoring models
There are certainly CPQ tools and other platforms that handle a portion of these capabilities.
But there will be countless gaps to fill in and this is the last segment of Internal Tooling where you want a proliferation of third party tools to implement and maintain.
Problem 2: The Process
The biggest challenge in streamlining Quote to Cash is already the lack of mature process and a proactive strategy.
Companies assume the right technology can fix some of these issues when, in reality, implementing CPQ on top of immature processes makes the problem compound.
No tool solves foundational problems.
It simply enables the processes you already have in place.
- Good Process + Good Tool = Great Outcomes
- Bad Process + Good Tool = Terrible Outcomes
- Usability becomes a massive bottleneck for Sales & Deal Desk teams
- Shortcuts made in systems design create scalability disasters
The pricing transformation is coming and adapting to it will take a huge cross-disciplinary effort.
Rev Ops & Finance to re-imagine the underlying processes and strategy.
GTM Systems to identify the right tools and design, implement properly.
My Prediction:
- This will be an area where making the investment is not an option
- A stronger overlap between pricing and product will form
- As a result, visibility into the role and value of Rev Ops will increase
- Investment will flow to these teams with less budgeting headache
- We will see a hiring surge across all teams involved in Quote to Cash
