When Per-Seat Pricing is Appropriate

TLDR; hardly ever.

We’ve talked a lot about how there’s almost always a better pricing metric than per seat or per user.

But, so much B2B software is still sold per seat, so it must be appropriate in some situations. Right?

For starters, let’s restate the north star: Price the Noun Customers Value.

The easiest way to identify this Most Valuable Noun is by understanding your customer’s business economics and assess if you’re hired to augment their revenue generating activities or hired to support the enabling operations around those revenue generating activities.

1. Direct Revenue Generation

How customers describe their revenue generating work:

  • Transactions/Loans/Deals (real estate, financial services)
  • Projects (consulting, agencies, construction)
  • Case load (healthcare, law firms)

A real estate brokerage doesn’t report “we had 47 agents this quarter.” 
They report “we closed 312 transactions.”

A consulting firm doesn’t report headcount. 
They report billable projects completed, utilization rates, project margins.

Physical therapy clinics measure patient case load, not number of physical therapists.

When your customer invoices for it, that’s your pricing metric.

2. Enabling Operations 

What enables their revenue generating work:

  • Studies (research teams)
  • Inspections (safety, compliance, quality)
  • Campaigns (marketing)

Enabling Operations requires more digging to understand the organizational value. Often the value is in costs avoided (fines, downtime, turnover) or growth opportunities generated (leads, retention, efficiency).

In both cases, every customer will have a natural range simply based on their organizational capacity. The overlap in these natural ranges is your customer segmentation – both for tiers and packaging.

One safety SaaS customer I interviewed last year attributed the software with achieving zero reportable OSHA incidents. This milestone has massive organizational value across cost savings, uptime, and morale for both workers and management.

Airlines have fleet schedules. Water parks have seasonal inspection requirements. Manufacturing facilities have compliance targets. They all count inspections.

Research facilities measure studies completed. Marketing teams measure campaigns launched. Even though these don’t appear directly on invoices, they’re how these teams justify their existence and budget.

A Hunch About Most Valuable Nouns

I’ve a hunch there’s actually a fairly short list of nouns in either category. The specifics vary by industry, but the patterns repeat.

Revenue generation boils down to: units of work sold to external customers.

Enabling operations boils down to: units of work completed to support those sales.

Send me your challenges and counter-examples to this hunch. I’m curious where it breaks down.

Why LLM Tools Are Still Per-Seat

OpenAI, Anthropic, and similar tools price per seat or credits for three reasons:

  1. They haven’t decided which business they’re in.
  2. Attribution is genuinely difficult – did the code completion save 2 minutes or prevent a $2M bug?
  3. They’re serving everyone from students to enterprises with undifferentiated products

But, when they niche down, it becomes far clearer. 

Legal AI can price against case load volume. 

Marketing AI could price against campaign volume.

It’s no longer about how many people are required to do the work, it’s about how much quality work can be done. 

But, as of this writing and as evidence by their recent Super Bowl commercials, the household names are still “figuring out product-market fit”, as their cap table and valuations mandate a massive TAM.

All of which proves the larger point: per-seat pricing admits we don’t yet understand how we fit into our customers’ economics.

The Actual Criteria for Per-Seat Pricing

So, from this, per-seat pricing is appropriate when:

  1. Your product has no relationship to how customers make money. Not direct. Not enabling. 

OR

  1. You’re a household name with massive pricing power. 

This describes only the most general collaboration tools; email, chat, calendaring, documents, spreadsheets, presentation software. That’s about it.

Per-seat pricing lets us pretend we can serve everyone while betting they’ll continue to grow headcount. 

But, we’re in vertical SaaS, so we’ve already said we’re not for everyone.

Pricing against our customers’ Most Valued Noun reinforces not just who we serve, but who we serve best.