You Want to Price Per-User? Prepare to Defend Yourself!
For decades, per-user pricing has been the default model for SaaS companies. It was simple, scalable, and—most importantly—customers were used to it.
But today, many companies that still default to per-user pricing may be doing so out of habit rather than strategy.
With AI, automation, and evolving buyer expectations reshaping how software delivers value, per-user pricing is losing relevance. While it remains the right choice in some cases, it is no longer the obvious default. The balance has tipped—whereas previously per-user pricing was often the right answer, now it usually isn’t.
If you are considering per-user pricing, it’s time to ask yourself a tough question: Can you actually defend it?
Why Per-User Pricing Became the Norm
Per-user pricing wasn’t chosen because it was the best model—it was just easy. It mirrored legacy software licensing, made budgeting predictable for finance teams, and was simple to sell. Even though user count often had little to do with actual value, it worked because:
For years, these advantages were enough. Industry surveys suggest per-user pricing is still the most common approach— Monevate 's recent SaaS industry survey found that 50% of growing B2B SaaS companies still price per user But given how rarely it aligns with value, there is no way it is the optimal model for this many companies.
Per-user pricing has always “punched above its weight” due to the structural forces that made it easy and acceptable. But today, those forces are collapsing.
The Number of Users Is No Longer a Growth-Oriented Metric
Two major shifts have made per-user pricing increasingly difficult to justify:
1️⃣ Per-User is No Longer Growth-Oriented
Automations and AI-powered tools mean that, in many sectors, one user can now do the work of many. Whereas previously a company might have needed five users on a platform, they can now "make do" with (say) two. And certainly, if their price scales with the number of users, they have an incentive to decrease their user counts. Companies are proactively limiting seat expansion when more seats don’t equate to more value, which is quite frequently the case.
Moreover, AI has already begun to disrupt certain sectors, meaning that AI agents can actually replace workers. In those spaces where almost all employees are users, the number of users is naturally going to decline as employee counts fall.
For these reasons, in many sectors, user counts are, at best, not growing and, at worst, falling off a cliff.
2️⃣ Per-User’s Acceptability Advantage Is Much Smaller
Per user has never been strongly value-aligned for the majority of SaaS companies. And now automations have increased the relative value-alignment of usage-based pricing vs. per user still further.
This has led to significant adoption of usage-based models in recent years. Monevate 's research shows that almost 40% of B2B SaaS companies now use some form of usage-metric within their pricing model.
Just as the prevalence of per-user models has made them familiar and widely accepted, the growing adoption of usage-based pricing has made those models increasingly acceptable. So now, while per-user pricing may still be preferred overall by customers, the degree of preference has decreased markedly.
This has significant implications for how frequently usage-based pricing "beats" per user. There is a clear winner between metrics when one is acceptable and the alternative is not, which was partly how user-based pricing maintained dominance historically. But once both pricing models cross the minimum acceptability threshold - as I would argue is now the case - the logical choice is to default to the more value-aligned option which, frequently, is usage-based.
Even per-user pricing’s historical predictability advantage is eroding! As Nick Francis, CEO of Help Scout , has pointed out alongside their usage-based pricing transformation, their analysis found that pricing based on a usage metric (contacts) actually led to more predictable spend for their customers than per-user pricing.
User-based pricing has had a long lucky streak, but the deck now seems firmly stacked against it.
The Burden of Proof for Per-User Pricing Has Increased
At Monevate, we frequently transform the pricing strategies of B2B SaaS companies. The pricing metric is one of the most important decisions in that process, and per-user pricing is still considered—but now it faces a much higher burden of proof.
Whenever one of my teams tells me they think we should recommend per-user pricing, my response is always the same:
“We’d better have a really robust rationale.”
You always need a strong justification for any pricing decision. But these days, to justify picking per-user pricing, your rationale needs to be significantly stronger than it would be for a a usage metric. It needs to be air-tight.
Why? The market changes we've discussed mean that the probability that per-user is truly the "best" option has decreased significantly. If you want to go in that direction, you have to prove—beyond doubt—that it’s the best choice.
Per-User Pricing is still best SOMETIMES. Just not USUALLY.
Let’s be clear—per-user pricing isn’t dead. In some cases, it’s absolutely the best model. My team has still recommended it for a handful of clients over the past twelve months, and in every situation, we were convinced it was the right choice.
I’m not saying it can never be the right choice. I’m saying it should no longer be expected to be a good answer—and it should certainly never be the default.
It’s now a niche model, the right choice only when rare conditions hold true. But when those conditions do hold, it’s a perfectly valid choice—and in some cases, even the optimum one.
It’s like a record player. Once, it was the best way to play music for almost everyone. Today, other formats work better for most. But some customers—those who value analog sound and physical collections—still persist with records. Not because they fear change, but because for them, the record player truly is the best choice.
How to Justify Per-User Pricing
If you’re still considering per-user pricing, make sure you can prove at least one of the following:
1️⃣ Value is truly user-driven. Per-user pricing still works really well in industries when the value really does scale with number of users. Consider collaboration tools like Slack and Zoom —there is no doubt that each new user increases the overall corporate utility of the product.
2️⃣ User counts are expected to grow over time. A great price metric delivers expansion revenue, and for that to be the case, you must expect your user counts to grow. This won’t be the case if in most end-state users “sign up” on day 1 – there needs to be a natural adding of users as engagement increases. Again, Slack is a great example, as increased organizational engagement with the platform typically yields more users over time.
3️⃣ You have other levers for expansion revenue. If user count won’t grow, you need expansion revenue from other sources. If you have other price structure elements that do this effectively — for example, tiered plans, modular add-ons, or hybrid models with a secondary, growing metric—you may not need users to grow over time.
4️⃣ There truly is no better, acceptable alternative. If every other potential metric has been carefully evaluated and genuinely doesn’t align with value or isn’t acceptable to customers, then per-user pricing might be the best option from a bad bunch. But this scenario is becoming rarer—be certain you’ve done the due diligence, and you can prove that it applies.
5️⃣ Your GTM team isn’t able to execute a change—yet. If your sales team literally lacks the ability to sell on a different metric today—and cannot be trained quickly enough—sticking with per-user might be a necessary short-term move. But this should be a transition plan, not a permanent strategy.
The Bottom Line:
Per-User Pricing Isn’t Dead—But It Should Be Dying
Per-user pricing has never been the universally “best” model that its prevalence suggested, and it is now becoming harder and harder to justify. The time has come where it can certainly no longer be considered the SaaS default.
Despite the overwhelming shift away from per-user pricing, if you still believe it’s the right choice for your business, you may be correct—it remains the absolute best option in certain rare cases. But be prepared - you will need a rigorous, compelling rationale to defend what looks to be an unwise decision for so many.
If you don't have one, then maybe it’s time to put down the record player, and open Spotify...