How a company spends its money tends to determine its strategy. How a company makes money comes down to supporting its business model.
Google is also reportedly considering charging fees for premium generative artificial intelligence (AI) features to balance advertising revenue with its regular search products, and is considering charging fees for its premium generative artificial intelligence (AI) capabilities, as well as software packaging and The pricing model has become a top priority. Especially for B2B SaaS (Software as a Service) and prosumer companies.
That's because Google isn't the only company evolving its product pricing. The reported AI subscription plan marks the first time the Mountain View, Calif.-based search giant has put core functionality behind a paywall, but the company's Big Tech peer Microsoft also announced this week (4 (April 2), announced new regular pricing for Windows 10. user. Windows 10 will reach end of support on October 14, 2025. According to Microsoft, organizations that want to continue using the operating system securely rather than upgrading to Windows 11 should enroll in the paid Extended Security Updates (ESU) program.
Microsoft notes that organizations running legacy software are at increased risk of potential security breaches and non-compliance. So, to keep these computers safe, companies must collect $61 per device in the first year, and that fee doubles every year for up to three years.
Like business models, pricing models vary greatly depending on the nature of the software itself, the company's target market, and the surrounding competitive environment, but two things are most important for B2B players to compete. How much is a feature or service worth? Who should I deliver it to? So is the cost of providing that feature or service to the buyer.
But with the rise of AI and other digital technologies, the inputs to that calculus are becoming more dynamic.
read more: OpenAI's GPT store is here. What is your AI monetization strategy?
The importance of maintaining the right price balance
Just as B2B companies commonly experiment with different models and pricing strategies to find the best balance between revenue generation and customer satisfaction, so do their buyers. Sometimes we judge by price.
“Not all buyers pay all suppliers the same way…Unlike traditional consumer payments, where there is a standardized way for consumers to pay and sellers to get paid, in the B2B space, buyers and suppliers No two profiles are the same,” Dean M. Leavitt, founder and CEO of Boost Payment Solutions, told PYMNTS.
“It’s important to focus on what’s important to the buyer because that’s what determines the deal with the supplier base…and buyers want flexibility when it comes to payment options,” he added. Ta.
B2B services are typically offered as a core product, an upgrade tier, or an add-on. Each comes with its own best practices.
For example, PYMNT reports that when web giant Amazon entered the enterprise chatbot race, it sought to overwhelm its rivals with a starting monthly (per user) subscription price of $20.
In response, OpenAI has updated its own pricing model.
Please also read: Amazon enters enterprise chatbot race, aiming to compete on cost
However, given the realities of today's macro business environment, where the cost of capital is higher than it has been in decades and interest rates are not likely to fall any time soon, small and medium-sized B2B companies may face a bumpy ride, including layoffs and strained conditions. It might become. It's about balancing risk and reward with uncertain sales momentum.
This is why choosing the right pricing strategy is of paramount importance. A prudent guide at this point may even be to reduce a company's customer portfolio while maintaining quality.
Still, the ongoing tough times won't last forever, and B2B companies that embrace refocusing their operations and the levers available to them, such as improving gross margins while keeping business spending flat, will emerge stronger. right.
“People still only talk about revenue. But who cares about revenue unless you're talking about increasing profitability?” Sezzle CEO Charlie Youakim told PYMNTS. “We can recalibrate our business model to ensure we can set prices at the level we need to work with companies…but we don’t do negative unit economics.”
