Last month at the KeyBanc/Mosaic Summit, one theme dominated my conversations with investors: the shift from legacy SaaS per-seat pricing to consumption- and outcome-based models.

The topic is so top of mind it now has its own three-letter acronym: UBP (Usage-Based Pricing).

Concerns about the SaaS model are valid, but investors’ fixation on pricing structures blinds them to other forces reshaping software businesses.

I’m seeing less seat reduction per se and more a two-pronged vendor consolidation: first, similar departmental software being unified onto a single, enterprise-wide solution (“horizontal consolidation”); second, best-of-breed vendors whose features sat on top of suites being absorbed into those broader ecosystems (“vertical consolidation”).

Seat counts and tier selection are also under intense scrutiny, with companies buying only what they truly need. Most SaaS vendors offer ‘good-better-best’ pricing, often with wide gaps, and many have added premium ‘pinnacle’ or ‘ultimate’ tiers. Businesses are increasingly questioning upgrades for incremental features, especially with AI agents on the horizon. Vendors must now prove the value and ROI of every higher-tier offering.

In this context, investors should evaluate a provider’s strategic position both in seat coverage and tier adoption.

Next comes AI. Its capabilities cut across product categories, giving customers more options, including building their own. At this stage, investors should look beyond a provider’s short-term ability to monetize AI features to evaluate how the adoption of a vendor’s AI capabilities positions it to become a true AI platform for its customers.

Eventually, consumption- and outcome-based pricing is no panacea. A recent Andreessen Horowitz survey underscores the challenges:

• 47% of buyers struggle to define clear, measurable outcomes

• 36% worry about cost predictability

• 25% face difficulty aligning on value attribution with vendors

• 24% acknowledge that outcomes often depend on factors beyond the vendor’s control

This doesn’t mean clinging to legacy seat-based models. Nor does it dismiss the need for pricing evolution to improve margins.

Here’s the point: investors should expect a deliberate, gradual transition and assess a vendor’s position holistically amid SaaS saturation and the early innings of AI adoption.

Off the soapbox.

Back in 2018, I found the typical sales-to-sales ops ratio to be around 25:1

Two recent pieces of research from Andreessen Horowitz and PeerSignal.org suggest 10:1 is the new norm.

This reflects, first, how the scope of sales ops has expanded with the rise of the revenue ops function.

Now, there’s a new trend: GTM Engineers, responsible not only for the instrumentation of the revenue stack but also for building the data infrastructure—data assembly, segmentation, signal gathering, and activation—to support all revenue motions.

I want to give credit to Guillaume "𝑮" Cabane for putting this trend on my radar.

In any event, I find A16Z’s ratios fascinating, underscoring just how central—and complex—data has become in sales.

In traditional frameworks though, TAM represents the entire market opportunity, different from:

1. SAM (Serviceable Addressable Market), its subset realistically targetable based on geography, pricing, and channels

2. SOM (Serviceable Obtainable Market), the narrower portion capturable with current capabilities under existing market conditions

So, what many practitioners label as "TAM" is technically SOM...

Similarly, ICP is sometimes mischaracterized as equivalent to SOM, when it identifies your "bullseye" customer with perfect alignment to your offering. This positions ICP as a strategic subset within SOM, not a synonym.

Ironically, this confusion happens precisely when, leveraging data and AI, segmentations are getting much sharper.

🥴

I had a stimulating discussion with Craig Rosenberg and Matt Amundson – two sharp minds deeply knowledgeable about their domains and the industry.

They kept me on my toes as we explored a few beliefs that every organization should challenge:

• The never-ending search for the "next best" sales motion

• Relying solely on CRM as the system of record

• Attempting to offset declining outbound prospecting performance through automation

• How to effectively sell value and sharpen your messaging

• The evolving role of the modern sales rep

We covered a wide range of topics, making it challenging to summarize. I plan to unpack a few select themes in bite-sized posts in the coming weeks.

In the meantime, I invite you to enjoy the full recording of our thought-provoking discussion at The Transaction.

After monitoring predictions, I see one overlooked factor: tech spend has reached unsustainable heights, forcing scrutiny of subscriptions. The rapid increase in FinOps roles reflects this pressure.

The issue is simple - businesses don't get the ROI they expect from their tech stack. Providers must demonstrate tangible value, not just trivial calculators or sweeping claims.

The subscription model itself will face pressure to transition to usage- or outcome-based pricing. Pre-committed seats face extinction.

In 2024, the market will favor providers who can prove their value.

SaaS providers must go beyond honing their GTM motions - they need to completely re-evaluate their underlying business model to thrive in the new market reality.

The market has fundamentally changed.

Both Microsoft Cloud (Azure) and Google Cloud have been upping their games.

I attended Microsoft's first-ever marketplace summit a couple of weeks ago. I was very impressed by the slew of announcements they made. I also learned a lot and put the link to the recording of the event in the first comment of this post

I got exposed to the growing importance of cloud marketplaces in general and of AWS in particular during my stint at Acqueon.

To be honest, I didn’t appreciate then their strategic role, thinking it was primarily for commoditized offerings.

I was wrong: cloud marketplaces accommodate a broad range of contracting terms and solutions, combining both software and services.

Cloud platforms from hyperscalers have become a key GTM option for enterprise software:

• it’s a natural ‘watering hole’ for buyers exploring their options

• they provide an initial clearance in terms of security and integration with the cloud platform

• they dramatically simplify the procurement process (purchasing, contracting, billing, payment, metering, etc.)

• and last but not least, they help customers fulfill their cloud purchase commitments

Microsoft commercial marketplace a.k.a. Azure Marketplace is one of several Microsoft marketplaces (the others being Microsoft Store, Teams Store, and AppSource (Dynamics).

With many announcements made (Private Offers, Multi-Party Private Offers, improving the discoverability of software, tracking usage, and reviews), Microsoft is closing the gap with AWS

For those not convinced of the critical nature of (cloud) marketplaces, I assembled a few data points.