Activity
Mon
Wed
Fri
Sun
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
What is this?
Less
More

Memberships

PricingSaaS

870 members • Free

1 contribution to PricingSaaS
The Catch-22 Every SaaS Company Is Facing
Howdy Pricing People šŸ‘‹šŸ¼ There's a fundamental tension in SaaS I can't stop thinking about: Every SaaS company wants an AI story right now. To have a credible AI story, people need to be using your AI features. If people are using your AI features at scale, your margins will take a hit. Nobody wants margin erosion because we're still valuing SaaS companies on metrics built for the previous generation. The short-term playbook says protect your margins. The long-term playbook says invest in AI or get left behind. They don't reconcile. I'm genuinely curious how you're all thinking about this: - What should SaaS companies be doing right now? - Seemingly everyone is turning to credits as a hedge to both tell the AI story and maintain margin control. Are there other strategies SaaS companies should consider? - Does something fundamental need to change in how we evaluate these businesses? Drop your thoughts below. I'll be digging into this in this week's newsletter, and would love to share perspectives from this group. 🫔 Rob
1 like • 2d
We have taken a very aggressive approach. We are divesting our professional services business and have rebuilt from scratch on AI. The stack is Lovable + Supabase on Vellum. We have moved a lot of our process and data into context documents that we manage inside Vellum. We use three main LLMs plus an AI built for doing Bayesian math. This allows us to innovate very quickly. Given the speed at which we are moving, fungible credits are the right pricing model for us. We had to invest a lot of effort into getting the design of the credits right so that credits provide roughly the same value across different agents and use cases. We are modelling gross profit at 70%, lower than a traditional SaaS business, as we spend a lot on compute and even as per token costs come down with the amount of reasoning we consume our overall compute costs should be stable. We are self funding so we do not have to justify the lower margins to investors. As an angel investor the lower margins of companies that are AI native are acceptable as long as they are > 60%.
1-1 of 1
Steven Forth
1
4points to level up
@steven-forth-1700
Pricing geek. Design geek. Working on open games and how they can be applied to pricing. Heavy user of genAI & vibe coding. Trained by Tom Nagle

Active 2d ago
Joined Oct 10, 2025
Powered by