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# Software pricing predictions report - 2024

This report draws from insights of 10 software pricing experts from diverse backgrounds, including SaaS founders, pricing leaders, startup advisors, and VC investors. Their collective knowledge ensures data-backed predictions for software pricing in 2024.

## In this guide

- [What's New for B2B Software Pricing?](/content/guides/software-pricing-predictions-report-2024#whats-new-for-b2b-software-pricing/index.html)
- [9 B2B Software Pricing Predictions for 2024 and Beyond](/content/guides/software-pricing-predictions-report-2024#9-b2b-software-pricing-predictions-for-2024-and-beyond/index.html)
  - [1) Companies will continue moving toward hybrid pricing](/content/guides/software-pricing-predictions-report-2024#1-companies-will-continue-moving-toward-hybrid-pricing/index.html)
  - [2) Pricing and packaging innovation will demand a thoughtful, creative approach](/content/guides/software-pricing-predictions-report-2024#2-pricing-and-packaging-innovation-will-demand-a-thoughtful-creative-approach/index.html)
  - [3) A robust tech stack will be needed to operationalize complex pricing](/content/guides/software-pricing-predictions-report-2024#3-a-robust-tech-stack-will-be-needed-to-operationalize-complex-pricing/index.html)
  - [4) AI adoption will push the software industry to innovate around pricing](/content/guides/software-pricing-predictions-report-2024#4-ai-adoption-will-push-the-software-industry-to-innovate-around-pricing/index.html)
  - [5) Well-run companies will limit custom pricing to key customers](/content/guides/software-pricing-predictions-report-2024#5-well-run-companies-will-limit-custom-pricing-to-key-customers/index.html)
  - [6) Companies with pricing power may continue raising prices – to a point](/content/guides/software-pricing-predictions-report-2024#6-companies-with-pricing-power-may-continue-raising-prices--to-a-point/index.html)
  - [7) Companies without pricing power will look internally to improve efficiencies](/content/guides/software-pricing-predictions-report-2024#7-companies-without-pricing-power-will-look-internally-to-improve-efficiencies/index.html)
  - [8) Monetization of existing customers will combat lack of new business](/content/guides/software-pricing-predictions-report-2024#8-monetization-of-existing-customers-will-combat-lack-of-new-business/index.html)
  - [9) Sales cycles will lengthen and companies will realize PLG is effort-intensive](/content/guides/software-pricing-predictions-report-2024#9-sales-cycles-will-lengthen-and-companies-will-realize-plg-is-effort-intensive/index.html)
- [Advice for Software Businesses to Prepare for Pricing in 2024](/content/guides/software-pricing-predictions-report-2024#advice-for-software-businesses-to-prepare-for-pricing-in-2024/index.html)

## Contributors

[Ariela D Bitran Rich](/content/blog/author/ariela-d-bitran-rich/index.html) Monetization Strategy Director, Chargebee

[Tanya Bragin](/content/blog/author/tanya-bragin/index.html) VP Product, ClickHouse

[Melissa Donohoe](/content/blog/author/melissa-donohoe/index.html) Investor, Notion Capital

[Todd Gardner](/content/blog/author/todd-gardner/index.html) Managing Director, SaaS Advisors

[Christian Owens](/content/blog/author/christian-owens/index.html) Founder and Executive Chairman, Paddle

[Andreas Panayiotou](/content/blog/author/andreas-panayiotou/index.html) Director, Pricing & Monetization, Notion Capital

[Griffin Parry](/content/blog/author/griffin-parry/index.html) CEO and Co-Founder, m3ter

[Eli Potter](/content/blog/author/eli-potter/index.html) VP Sales & CS, CIO as a Service, Insight Partners

[Kyle Poyar](/content/blog/author/kyle-poyar/index.html) Partner, OpenView Partners

[James Wood](/content/blog/author/james-wood/index.html) Head of Product, m3ter

## What's New for B2B Software Pricing?

2023 was a year of contradictions in software. Some predicted a recession and slashed costs across the board. Others were more optimistic and continue to be bullish long-term. Growth rates in general slowed down and fundraising successes were harder to come by. At the same time, the rapid growth of Generative AI since the launch of ChatGPT in late 2022 drove industry-wide product innovation, both with existing providers and AI-native new entrants, who bucked the negative growth trends that were dragging others down.

And amidst all of this was the never-ending debate: **What should software companies do about pricing?** As the focus shifts toward efficiency and away from growth at any cost, it’s becoming clearer that pricing is a key lever not all companies are taking full advantage of, that pricing innovation still has a long way to go, and that it will continue to be a growing priority for 2024.

With this context in mind, m3ter brings you our **second annual software pricing predictions report**. We interviewed ten experts in software pricing to hear their predictions and advice for B2B software companies in 2024.

## 9 B2B Software Pricing Predictions for 2024 and Beyond

### 1) Companies will continue moving toward hybrid pricing

One of the hottest topics in software this year was the pricing spectrum, with pricing designs ranging from traditional subscriptions to pure [usage-based pricing](/content/guides/usage-based-pricing/index.html) (UBP). Most of our experts agreed that the middle of that range, typically called hybrid pricing, is where most companies are headed.

> **James Wood**, product and pricing strategy lead at m3ter, believes that in 2024 and the years to come, most usage-based companies – across go-to-market motions – will probably end up with:
>  
> a usage-based subscription, but with overages that allow people to expand. This has benefits not only in capturing repeatable ARR and preventing volatility, but also in encouraging customers to make the most of their allowances and use the product, which can lead to expansion benefits as well.

> **Long-term prediction**
>  
> I tend to find that hybrid models are a great transition pricing spot, but ultimately there's only so much you can do without overcomplicating things for your customers. There was certainly more hybrid pricing over the last two years as folks looked for relatively fast ways to roll out AI and other new product monetization without disrupting their existing pricing model.
>  
> I’m keeping an eye on the creativity of emerging players – like AI-native companies without an installed base – to see the traction they have with more disruptive pricing models. I think that will point to where the destination is on the spectrum.

### 2) Pricing and packaging innovation will demand a **thoughtful, creative approach**

The complexity that arises from a hybrid pricing strategy, or from doing any sort of pricing and packaging redesign, will require companies to be more intentional in 2024. According to **Christian Owens**, founder and executive director of Paddle, there’s been quite a divide between how companies have adopted usage-based pricing elements. They've seen an avalanche of companies trying to adopt it with, in his words, mixed success. While some take a considered approach, others are moving to UBP reactively – often with "horrible" results.

> Companies adding UBP elements will realize they can’t take the approach they did with traditional pricing – to just make it up. They’ll need to take a more thoughtful, conscious approach to pricing.

### 3) A robust **tech stack** will be needed to operationalize complex pricing

It’s one thing to design pricing in an Excel sheet or vote on it in a pricing committee meeting, but pricing success comes down to whether you can operationalize. This is the one prediction for 2024 that every single contributor brought up.

### 4) **AI adoption** will push the software industry to innovate around pricing

According to OpenView’s [2023 SaaS benchmarks report](https://openviewpartners.com/2023-saas-benchmarks-report/), **46%** of SaaS companies launched AI features over the last year and another **31%** are actively building or testing AI features.

### 5) Well-run companies will limit custom pricing to **key customers**

### 6) Companies with pricing power may continue **raising prices** – to a point

### 7) Companies without pricing power will **look internally** to improve efficiencies

### 8) **Monetization of existing customers** will combat lack of new business

### 9) **Sales cycles** will lengthen and companies will realize **PLG** is effort-intensive

## Advice for Software Businesses to Prepare for Pricing in 2024

##### **1) Figure out which strategies worked even during economic uncertainty – and repeat them**
> Stay focused and take the time to understand how the ups and downs of the economy affected your business. You can use that to uncover what’s working.

##### 2) Be sympathetic to existing customers that can’t afford a price hike
> Ensure the value you provide aligns with your pricing.

##### 3) Have the infrastructure in place to use pricing as a strategic lever
> There's a lot of businesses that will have to revamp their business models to become more efficient.

##### 4) Invest in sustained pricing capabilities
> If you haven't invested in sustained pricing capabilities, it's a big lever that you're going to need to address soon.

##### 5) Get comfortable with – and encourage – rapid experimentation
> Get really comfortable with experimentation and learn from the companies who are larger than you and ahead of you.

##### 6) Build your own pricing strategy; don’t copy what everyone else is doing
> When working on pricing, don’t just look at what other people do and blindly copy it.

##### 7) Ensure you have the operational capability needed to deploy pricing
> Pricing is a crucial growth lever.

##### 8) Focus on value and outcomes
> A lot of companies struggle to articulate customer value of their products.

##### 9) Invest in infrastructure that allows you to evolve and innovate pricing
> Many companies are running into limits with their existing tech stack.

##### 10) Understand your pricing power and imbue that confidence throughout the organization
> Try to understand your pricing power.