[metacritic12]

This analysis has the hidden assumption, which is that a customer that is feeling pain and doing layoffs is still getting the same (or higher) ROI from your software.

If your software improves the productivity in your customer in a per-employee basis, of course you should still do per-seat pricing. That your customer has 10 employees using it instead of 100 before means your customer is actually getting 10x as less value from your software, and your pricing power is 10x less.

If you try to hack around this by changing to per interaction, or per thousand pageviews, this is equivalent to essentially raising your price. In other words, either you were underpricing to begin with in the previous economic boom, or your total profits will suffer if you move from per-seat pricing because then your costs are higher than optimal.

Now of course, if you provide value that is not on a per-employee basis, they by all means move off of per-seat pricing. But in that case why were you doing per-seat to begin with?

[AnhTho_FR]

I agree with you, actually one underlying hypothesis of this post is: Lots of companies shouldn’t have priced « per-seat » in the first place. But in a bull market, the teams were growing insanely and this pricing was easy to understand, it became a « by default » pricing in a lot of cases.

With the correction, a more thorough approach might be necessary.