Great SaaS Contraction: Pricing Power, Seat Model Collapse, and the AI Buyer Squeeze

Read time: 3 minutes.

Welcome to the 177th edition of The Growth Elements Newsletter. Every Monday and sometimes on Thursday, I write an essay on growth metrics & experiments and business case studies.

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2025 is officially the year the SaaS seat model broke. CFOs are tired of paying “per licensed user” for software used by half the team. Automation is cutting seat counts. AI doesn’t buy seats; it runs tasks autonomously.

Operators can’t just “raise prices” and hope for the best. Instead, they’re negotiating, repackaging, and defending revenue against a new class of buyer: the ruthless, AI-enabled procurement team.

Why the Old Revenue Engine Is Stalling

• Per-seat pricing models are shrinking as automation lets one person do the work of three.​

• Customers want outcome-based pricing or at least usage-based billing.

• Silent price hikes are failing, as CFOs openly compare contract line-items and demand concessions.

Logo churn up, expansion down.

• Seat reductions mean even happy customers cost you ARR.

• Margins slip when discounting and repackaging become the default to keep business.

What Operators Are Doing to Survive the Squeeze

[1] Package defensively.

• Bundle AI functionality and premium analytics into usage tiers.

• Offer flex-seat models and sunset all-or-nothing enterprise contracts.

• When the buyer asks for a price cut, offer expansion and more value per seat before raw discounting.

[2] Negotiate with data, not hope.

• Prep for renewal cycles with clear outcome metrics: “Here’s the ROI, not just the features.”

• Use competitor benchmarks, usage stats, and third-party reviews to support your price.

[3] Shift GTM language.

• Sell on savings and efficiency (what AI lets the customer do).

• Prioritise cost-per-task or per-process pricing (not per user).

[4] Anticipate the buyer’s new game.

• Expect multi-year contracts to get sliced up, with opt-outs, credits, and usage caps.

• Get ahead on legal, compliance, and CFO objection handling. Arm your sales ops to track every redline.

Operator Mindset: Lead with Value, Move with Speed

In a buyer’s market, the only defense is speed and clarity. Be the first to reprice, the boldest to repackage, and the best at proving your value per dollar spent.

Don’t wait for concessions, create them, and use the contraction to build upsell and stickier relationships.

Bottom Line

Pricing power is no longer just about your product; it’s about how fast you can show value in an AI-enabled, seat-light buying environment.

SaaS leaders who defend revenue in 2025 won’t just survive the squeeze; they’ll set new standards for what “software pricing” means in the age of AI.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria