Implications for the SaaS Industry

As more and more products add AI features, this shift has enormous implications for the entire SaaS ecosystem:

1. Pricing Strategy Overhaul : SaaS companies will need to rethink their pricing strategies completely. The days of simple "per user, per month" models are numbered.


2. Evolution of Sales and Marketing : Say

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First, AI agents are likely to lead to new go-to-market strategies for SaaS companies. With potentially fewer humans in the loop, there is likely to be a further decoupling of seats/users and contract value. To capture value, LLM applications will need a new scaling factor for pricing: variable value-based pricing is a plausible solution.

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With Generative AI’s budding reasoning capabilities, a new class of agentic applications is starting to emerge.

What shape do these application layer companies take? Interestingly, these companies look different than their cloud predecessors:

• Cloud companies targeted the software profit pool. AI companies target the services profit pool.


• Cloud

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