SaaStr Annual 2024: How to Price and Package AI Products with Unusual VC

Enterprise adoption of generative AI has hit an inflection point in 2024 with many successful tools productizing parts of professional services. They are essentially providing Services-as-Software - the full realization of the original vision of SaaS. However pricing these products is extremely challenging - even more so for incumbents who need to disrupt their current business models. Learn how the emerging leaders in AI are approaching pricing and packaging their products for hypergrowth.

1. How to Price and Package AI Products Sandhya Hegde General Partner Unusual Ventures

2. Blue $1B AUM Sandhya Hegde | GP, Unusual Ventures | @sandhya

3. Sandhya Hegde | GP, Unusual Ventures | @sandhya Monetization is the big question in generative AI today

4. While LLM Inference costs have decreased exponentially

5. But pricing and packaging AI SaaS is uniquely hard Sandhya Hegde | GP, Unusual Ventures | @sandhya Dynamic costs Volatile usage Unproven ROI * Dropping $ per token Hosting, fine-tuning Training data Adoption curve Degrees of automation Fraud Selection Reliability, Accuracy Effectiveness

6. AI isn’t driving any revolution in pricing. Yet. Sandhya Hegde | GP, Unusual Ventures | @sandhya success based * personalized * dynamic

7. SaaS CEOs have three questions to answer.. Sandhya Hegde | GP, Unusual Ventures | @sandhya Model: seats vs usage Price: asp vs share Package: add-on or incl.

8. Pricing/packaging reflects the entire company strategy Sandhya Hegde | GP, Unusual Ventures | @sandhya LTV/ CAC Gross Margin Win Rate

9. Good pricing & packaging grows enterprise value, not ASP Sandhya Hegde | GP, Unusual Ventures | @sandhya

10. First principle considerations for pricing and packaging Sandhya Hegde | GP, Unusual Ventures | @sandhya Customer ROI Company Strategy Can you directly attribute revenue/cost impact to the usage of your product? Can your customer easily quantify the improved productivity per user? What functionality do enterprise buyers need that others don’t? How badly? Can you land self-serve with small teams in big enterprises (great UX)? Can you make your cost basis lower than competitors (better engineering)? Can you do fast custom deployments for enterprises?

11. Model

12. AI SaaS companies mostly converge on hybrid pricing Sandhya Hegde | GP, Unusual Ventures | @sandhya Subscription +Consumption +Solution Per (active) user Trial/freemium Per product with add ons Seat + Usage based Success based Credit drawdowns Embedded Seat + Usage + Service bundles Custom deployments Personalization ~ 25% of SaaS businesses and over 55% of AI SaaS businesses self-report as having hybrid pricing

13. Sandhya Hegde | GP, Unusual Ventures | @sandhya Value Support

14. Better free time Save/spend time that can’t be monetized More monetizable time Increase revenue or save cost Value Support Sandhya Hegde | GP, Unusual Ventures | @sandhya

15. Self-serve Users can learn and apply on own Managed change Users need consulting services Value Support Sandhya Hegde | GP, Unusual Ventures | @sandhya

16. Sandhya Hegde | GP, Unusual Ventures | @sandhya

17. Subscription Consumption/hybrid Solution Cost certainty ROI certainty Project certainty Support Value Sandhya Hegde | GP, Unusual Ventures | @sandhya

18. Sandhya Hegde | GP, Unusual Ventures | @sandhya

19. 2. Price

20. A case study on ASP in image generation vs Sandhya Hegde | GP, Unusual Ventures | @sandhya

21. Basic Standard Pro Mega Monthly Subscription Cost $10/mo per user $30/mo per user $60/mo per user $120/mo per user Fast GPU Time 3.3 hrs 15 hrs 30 hrs 60 hrs Purchase Extra GPU Time $4/hr Maximum Concurrent Jobs 3 Jobs 10 Jobs waiting in queue 12 Fast Jobs 3 Relaxed Jobs 10 Jobs in queue Model

22. Basic Standard Pro Mega Monthly Subscription Cost $10/mo per user $30/mo per user $60/mo per user $120/mo per user Fast GPU Time 3.3 hrs 15 hrs 30 hrs 60 hrs Purchase Extra GPU Time $4/hr Maximum Concurrent Jobs 3 Jobs 10 Jobs waiting in queue 12 Fast Jobs 3 Relaxed Jobs 10 Jobs in queue Logic $4/hr per GPU with 17-60% upfront discount Free version slow + public Model

23. 3. Package

24. Value Adoption Included in core package, with higher ASP Add on Included in core package Sandhya Hegde | GP, Unusual Ventures | @sandhya

25. Majority cos bundling AI features into existing packages

26. Sandhya Hegde | GP, Unusual Ventures | @sandhya

27. Sandhya Hegde | GP, Unusual Ventures | @sandhya

28. Key Takeaways

29. Good pricing and packaging grows enterprise value Sandhya Hegde | GP, Unusual Ventures | @sandhya 1 2 4 Majority of successful AI companies use hybrid pricing models Customers want predictability in models - either of cost, ROI or project success Pricing & packaging is an all company strategy led by the CEO 5 Packaging bundles are driven by what customers want to buy and use together 3 Price points are often driven by how deep in the customer’s workflow you go

30. Resources Reforge - https://www.reforge.com/blog/pricing-strategy Openview/Kyle Poyar - https://openviewpartners.com/blog/category/pricing-positioning/ Lenny’s newsletter - https://www.lennysnewsletter.com/p/how-should-you-monetize-your-ai-features Stigg - https://www.stigg.io/the-developer-guide-to-the-modern-saas-monetization-galaxy Unusual Startup Field Guide - https://www.unusual.vc/articles/free-plan-vs-free-trial-in-plg Sandhya Hegde | GP, Unusual Ventures | @sandhya

31. THANK YOU! Sandhya Hegde SaaS VC, Exec, founder

32. UP NEXT: Freemium to PLG to SLG: Lessons (and Mistakes!) from Dropbox, Salesforce, and Vimeo Adam Gross Board Member, Former CEO Vimeo