by Vikram Srinivasan

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Enterprise buyers keep asking one question: “Is your AI priced like SaaS, like consulting, or something in between?”

The honest answer: none of the old labels fit. Per‑seat SaaS ignores AI’s leverage, pure output pricing rattles CFOs, and outcome contracts collapse under measurement debates. Add the custom work required to embed AI in niche workflows, and procurement reaches for a time‑and‑materials rate card every time.

In this note I break down why each conventional model stalls in the enterprise, where customization changes the stakes, and the hybrid structure that’s working for us at Needl.ai. If you’re negotiating an AI contract right now, this will save you cycles.

"TL;DR": Per‑seat SaaS doesn’t fit AI, outcome pricing is hard to measure, output pricing spikes bills, and procurement still wants time‑and‑materials—especially when customization is where the real magic happens.

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1  |  The Old Guard: Per‑User SaaS

Per‑seat licensing worked for CRM and chat apps—you could count logins.

With an AI model that can 10× a team (or sit idle if the workflow’s wrong), charging for “seats” is like billing electricity by light‑switches.

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2  |  Outcome‑Based Pricing - Sounds Great, Measures Hard

Pitch: “Pay us a slice of the value we unlock.”

Reality: agreeing on that value is a marathon of baselines, telemetry, and politics.

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3  |  Output‑Based Pricing – Tangible but Tension‑Filled

Price per research note, compliance report, or 1,000 extracted datapoints. Easy to count, but spiky usage = spiky invoices, and customers run the workload on their cloud for pennies.

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4  |  The Customisation Elephant 🐘

Enterprise AI only shines when you deep‑bake niche business logic and tribal knowledge into the system—think obscure reconciliations in a bank’s ops team or a hedge fund’s proprietary taxonomy.

That implementation work looks like classic consulting, so procurement’s mental model is time‑and‑materials (T&M) with an annual maintenance contract. The second they sniff “custom work,” they default to rate‑cards and hours.

Procurement buys software via the standard one-time setup fee with monthly subscription software and monthly support fee. they want to compare 2-3 competitive quotes, and this gives a framework.

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How Custom Depth Maps to Pricing Fit

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5  |  Our Hybrid Take at Needl.ai

‍1. Pick one north‑star outcome (e.g., time‑to‑insight).

2. Flat annual subscription tied to an improving SLA.

3. Custom context baked up‑front in a fixed‑fee onboarding SOW—keeps OpEx clean.

Champions cheer; procurement whips out the T&M template.

The job: translate our subscription into their trusted frame without diluting the outcome skin‑in‑the‑game.

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6  |  Tactics for the Procurement Wall

• Translate outcomes into familiar cost‑avoidance numbers.

• Show total‑cost parity vs. staff hours.

• Offer a crawl‑walk‑run ramp with price locks.

• Invite procurement early, not after champagne with the business team.

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Closing Thoughts

AI vendors adore value‑based pricing decks. Enterprises still buy the way their ERP tells them to. The sweet spot (for now) is a subscription that speaks the language of outcomes while letting buyers map it back to T&M comfort zones.

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For more insights from Vikram on enterprise AI, market intelligence, and what we’re building at Needl.ai, subscribe to his substack.

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