Executive Summary

Adoption of Gen AI tools into existing SaaS solutions and new “AI-native” startups are exerting pressure on traditional, seat-based subscription pricing models. Mixing usage, outcome, platform fee, and other pricing models with traditional subscriptions will become the norm after a period of growing pains. Companies leaning into this shift are entering unexplored territory of SaaS. Buyers, vendors, and investors are struggling to navigate this new terrain. In this research report, we outline the key findings, recommendations, and considerations facing buyers, vendors, and institutional investors.

MGI core finding: billing is the control pane of AI. If it cannot be billed, it cannot be governed. If it cannot be governed, finance will shut it down. The vast majority of companies don’t have the billing infrastructure to support today’s new requirements.

The Situation: What Is Changing

Gen AI is not a feature wave. It is a cost-structure shock forcing a redesign of how software is priced, billed, and governed. The central disruption is not models commoditizing code. AI introduces variable cost at the core of software delivery for the first time, and the vast majority of organizations lack the IT and business infrastructure to manage it.

Multi-Modal Monetization (M3) is a conceptual framework describing the foundational elements for Quote-to-Cash and monetization for modern business. It is comprised of three pillars:

  • The need to support any pricing model: one-time, recurring, usage, outcomes, and all combinations thereof.
  • The need to support all types of sales motions within a single customer account: direct, indirect, PLG, partner-led, marketplaces, et al.
  • To do these with speed and agility.

The transition from seat-based to seat-plus-usage-based pricing models and Multi-Modal Monetization (M3) is already underway across enterprise software. History suggests this transition is fraught with risk but manageable. Only organizations who move deliberately with data and on their own terms will be successful. Companies reacting under pressure will pay more and take longer to make this transition.

<10%
of organizations have adequate skills/tools to manage usage-based pricing today		60%+
of software companies plan to deploy usage billing within 12 months		$1M-$5M+
estimated remediation cost when billing stack fails after go-live

High Impact Findings

Finding 1: AI Commoditizes Product and Monetization Determines Winners

AI features are replicated rapidly across the industry. Model access is broadly available. Product capability is no longer the decisive competitive differentiator. It is the monetization system: the infrastructure, processes, and operational capabilities enabling faster pricing change, more accurate billing, and buyer trust. MGI’s competitive stack framework orders these layers:

Product: necessary but widely replicable Data: important but rapidly commoditizing Monetization system: ...