Why I Believe Usage-Based Pricing Works for Software

Published 2024-03-26 · Updated 2026-05-23 · 5 min read · SaaS and Cloud AI · By Sahin Boydas

I'm sharing my thoughts on the top AI APIs for computer vision this year and how they can be used in real SaaS products, from tagging images automatically to analyzing video in real time.

The gap between theory and practice in why i believe usage-based pricing works for software is enormous. I've lived on both sides.

I'm sharing my thoughts on the top AI APIs for computer vision this year and how they can be used in real SaaS products, from tagging images automatically to analyzing video in real time.

The Reality Nobody Talks About

Most people approach why i believe usage-based pricing works for software with assumptions that made sense five years ago. The world has moved on. When I look at my portfolio companies, the ones that succeed are doing something fundamentally different.

The first thing to understand is that you need to move fast and break things. I've seen this play out across dozens of companies. The pattern is unmistakable.

At RemoteTeam, we learned this the hard way. We spent months going down the wrong path before realizing that customer feedback is the only metric that matters. Once we made the switch, everything changed.

The Counterintuitive Truth

Here's what surprised me most about why i believe usage-based pricing works for software: the best practitioners do less, not more.

When I was building MovieLaLa, we tried to do everything at once. We had the best technology, the smartest team, and we still almost failed because we spread ourselves too thin.

The lesson I took from that experience, and from watching hundreds of other companies, is that you need to move fast and break things. It sounds simple. It's incredibly hard to execute.

The AI Angle

I can't talk about why i believe usage-based pricing works for software in 2026 without mentioning AI. As someone who's invested in Anthropic, OpenAI, Scale AI, and Hugging Face, I have a front-row seat to how AI is transforming this space.

The short version: AI makes good practitioners better and bad practitioners worse. It's an amplifier, not a replacement.

I've seen companies use AI to 10x their why i believe usage-based pricing works for software capabilities. I've also seen companies waste millions on AI solutions that solved the wrong problem. The difference comes down to understanding what you're actually trying to achieve.

This connects to broader themes around cloud AI services, AI infrastructure costs, AI pricing models that I've been thinking about a lot lately.

Wrapping Up

I've shared a lot here, and I know it can feel overwhelming. But here's the thing about why i believe usage-based pricing works for software: you don't need to get everything right on day one. You just need to get started and keep improving.

The founders in my portfolio who excel at why i believe usage-based pricing works for software share one trait: they're relentlessly practical. They don't chase perfection. They chase progress.

That's the mindset I'd encourage you to adopt. Start where you are. Use what you have. Do what you can. And keep pushing forward.

As always, I'm rooting for you.

Frequently Asked Questions

What experience informs this perspective?

This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.

What's the most common pushback you get on this?

People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.

How can I apply this thinking to my own situation?

Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.

Do all experts agree with this view?

No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.

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