Rethinking Software: From Features to Outcomes. Part 2

AI’s Impact on Pricing

Last post, I discussed the impact of AI on UI and its eventual impact on how we interact with products. I believe products will move towards more function and outcome than feature bloat. The question becomes, how does the industry price those features?

Pricing

Currently the pricing of SaaS products are based on user licenses per month. That sweet, sweet ARR business leaders are looking for that is so important to a company. Locking a user in for extended periods of time is fantastic… and makes companies lazy.

The growth in feature set based on the potential ARR growth of new buyers is unsustainable.

Feature bloat. Old features. Features that move to other pricing tiers. Features that need updating. It’s a bit of a mess.

Pricing around feature use rather than user license may end up being a better option.

Now, there may be some complications for pricing the feature to the user, but we are already getting a taste of new pricing models with the way AI features are priced per credit, or have usage based pricing.

What will this do?

Businesses now have the opportunity to create and maintain features based on real usage by linking value directly to pricing. Currently app uses a base form of “winner takes all” approach of feature growth, where companies add more and more features to chase market dominance, only to neglect them once the product is deemed “feature complete.”

Over time, this leads to bloated, tired app. Old infrastructure becomes expensive to maintain, updates are deprioritized, and the cost of revitalization becomes too high. Eventually, the service stagnates—and a leaner, more focused competitor takes its place.

The cycle starts all over again, leaving the learning and productivity gains of what was designed and worked well by the now stagnant service left out completely. It’s like going to school every year, taking summer off, and now the first quarter of the new year is reviewing what was forgotten and lost over summer. It’s very inefficient.

I know this is a hand wavy statement, and I’m sure feature use metrics and growth is an important part of whether to invest in a feature or deprioritize other tired features, but I can guarantee you that many features (and the UI to those features) are created because a single multi-million dollar deal hangs in the balance and then is completely neglected once the deal is struck.

How does AI and UI fit into this?

The future pricing model may not be based on the network effect, or market share, it may be based on which piece of code can complete the task at hand the best. AI agents will already change the way we interact with tools and apps, now companies will have to focus on the performance of the feature rather than the network effect of the tool, and how many features they can provide to the user in a locked in app. Breaking this out of the UI will impact the viability of a “do-all” tool, but also provide better value to the end user.

I just wanna highlight text, not create an account sign in, install the app, or worse, have to contact a sales rep just so I can use the one core feature that is drawing me to use that app.

Part 2: Final Thoughts

While knowing this is a hypothetical direction businesses may go, I do think that companies will have to fight with this model as bigger companies, like Google, ChatGPT and others define how we work and produce. They want us to use all their services, but users like to pick and choose. I like Googles email. I don’t like the Gmail app, so I use another product for that. Now we will take it step further, and instead of creating the same app with different flavors we will take the pieces of each one and design a new user interface, hell, a new operating system on getting shit done, rather than micro-transactions and monthly payments to products we use twice a year.