“Your margin is my opportunity” – Jeff Bezos

My first biz dev call of the new year was with an exec saying their seat-based SaaS missed 2025 revenue targets. 

The cause? Some combination of customers getting smaller, finance consolidating SaaS tools, and AI helping customers do more in-house. All of which meant fewer seats, renewed at a lower rate. Oh, and their 2026 goals were set back in Q3.

I’ve heard this story many times over the past year: new technology breaks existing revenue model.

And I’ve heard it many times before.

My first job out of college was at a printing company in central Wisconsin. Their high-profile clients were still demanding marketing materials, but not on paper anymore. They wanted CD-ROMs, websites, interactive digital experiences. The business model was breaking. I was one of two people hired to ease the transition from print-based to digital-based marketing.

CD-ROMs in the ‘90s. Web 2.0 in the 2000s. Mobile in the 2010s. LLMs today.

My work begins when a new technology threatens to obsolete a legacy business model.

While SaaS itself may not be legacy, seat-based pricing absolutely is. A vestige of those shrink-wrapped CD-ROMs I referenced earlier. In the physical media world, buying five licenses meant unwrapping, installing, and registering license keys from 5 discs into 5 different computers. Whether 50 or 500, this process scaled linearly across the department and company. SaaS thankfully eliminated all the packaging and registering of license keys, but it somehow maintained the unit of value – the seat license.

This was fine until about 2005, with the advent of Web 2.0, and the increased popularity of exposing API endpoints. Once computer programs could reliably interact with each other to create business value, without a human directly intervening, the concept of a ‘seat’ was obsolete. Seats had a bit of resurgence through ZIRP as companies steadily expanded headcount due to cheap capital.

But today, companies are no longer expanding headcount. Many are holding steady. The largest companies regularly announce 8% staff reductions. It’s tough to achieve your annual revenue goal if it’s based on customers continuously growing headcount and they…don’t.

This past year I’ve helped seat-based SaaS providers uncover, and revise pricing around, the metric their customers value (Transactions, Studies, Signatures, etc). In each of these organizations, ARR is the metric that matters most, Seats are just one way of getting there.

The same pattern is hitting professional services firms. Executives tell me the hourly billing model is collapsing under immense pressure from LLMs both internally and externally. Internally, their teams are substantially more productive on an hourly basis. Just as frameworks like WordPress, Ruby on Rails, and Drupal accelerated software productivity two decades ago. Externally, their clients are expecting even faster turnaround. Both the actual productivity and the expected productivity are aggressively compressing total number of billable hours. Worse yet, billable hours are a perishable good. Once they’re gone, they’re gone.

Whether SaaS or professional services, the solution is the same: Stop optimizing price points on broken metrics and start articulating customer value. Not through surveys or competitive benchmarks, but direct human-to-human conversation. What outcome are customers trying to achieve with your offering? How does your offering fit into the economics of their business?

Operationally shifting a professional services firm can be more complex. Friends of mine have filled out timesheets and calculated their billable hours every week of their multi-decade professional career. The embeddedness of billable hours into every employee’s daily experience means value-based pricing can be a jarring cultural adjustment. But the alternative is worse: watching the business model slowly collapse as technology makes hours irrelevant.

The printing company’s clients still needed marketing materials. The SaaS customers still need performant, accessible tools. Professional services clients still need specialized expertise. The core customer value is still there – we just stopped asking about it.

When a new technology or market shift breaks your revenue model, it’s an opportunity to rediscover customer value. 

That’s the work I do.

The question isn’t whether to change. It’s whether you can before someone else devours your margins.