01
ECONOMICS & MARGINS
Fixed MRR — predictable, regardless of usage
Revenue predictability
Variable — tied directly to consumption volume
Negative margins if power users exceed expected usage
Margin risk
Protected — cost scales with revenue by design
Assumes uniform distribution across all seats
Cost modeling
Reflects actual usage distribution in real time
Per seat / per month
Pricing unit
Per token / per call / per outcome
02
BUYER ENTRY & COMMITMENT
High — must commit before knowing true value
Entry barrier
Low — pay as you go, start with zero commitment
Upfront seat count decision required
Commitment required
None — scale up or down at any time
"If I give them a seat, they cost me forever"
Adding new users
Inviting users is free — cost only accrues on use
03
VALUE ↔ COST ALIGNMENT
Weak — pay regardless of whether value is delivered
Value-cost coupling
Strong — cost is a direct proxy for value received
Yes — low-usage seats still billed at full rate
Idle user penalty
None — idle users generate zero cost
Harder to demonstrate — usage and spend are decoupled
ROI clarity
Direct — usage volume maps to value delivered
04
UPSELL MECHANICS
Explicit — requires a deliberate sales act
Upsell motion
Implicit — use more, pay more, automatically
More seats, tier upgrade, or add-on purchase
Expansion trigger
Deeper usage — new use cases, more automation
High — budget approval, procurement cycle
Upsell friction
Low — expansion happens without a sales conversation
05
ADOPTION STRATEGY
Broad seat activation — any engagement counts
Activation goal
Deep, sustained usage — real workflows, not logins
Generic onboarding across all seats
Onboarding approach
Use-case-specific — guide each user to their value moment
Lower — one-time activation per seat is sufficient
Activation effort
Higher — must drive recurring, habitual usage
Moderate — stickiness matters, depth less so
Product requirement
High — product must actively guide users to value
06
RISK PROFILE
Margin erosion from power users exceeding assumptions
Vendor risk
Revenue volatility if usage drops or is seasonal
Overpaying for unused seats across the org
Buyer risk
Unpredictable bills at scale — hard to budget
Usage and margins are predictable and uniform
Best when...
Usage patterns are unknown, variable, or AI-driven
07
BUYER PSYCHOLOGY
"I own access to this tool"
Mental model
"I pay for outcomes I actually receive"
Simple to reason about — easy to budget and forecast
Cognitive load
Requires usage forecasting — harder to budget upfront
Seat permanence anxiety — every seat feels like a long-term liability
Psychological barrier
"I'll only pay when I get value"
08
HEALTH SIGNALS
Key metrics