Pricing expert Madhavan Ramanujam explains the value capture potential for agentic AI products replacing or augmenting human labor.
Insight
Ramanujam: Autonomous AI software can capture 25% to 50% of created value
“In the classic SaaS situation, we used to say if you can charge 10 to 20% of the value, that's actually great. But in AI, you can actually charge 25 to 50% because it is autonomous.”
Prediction Not checkable as stated
Ramanujam: Outcome-based AI pricing will jump from 5% to 25% in 3 years
“In, there are a lot of benchmarks and studies that actually show that, and this is also my belief, that in the next three years, that five percent number will move to 25%.”
Insight
Pricing low to drive growth is a fallacy without Amazon-like costs
“Often I see entrepreneurs who say, let's just price low to like grain, gain growth. That's a fallacy. I mean, if you don't have a business model that actually supports this compared to Amazon, then You probably know shouldn't be in a penetration strategy.”
Insight
Economic downturns are the optimal time to transition to usage-based pricing
“Frankly, this is the best time to actually think about these things. Like if, you know, if people are not using the product, changing it to a usage-based, people would say that's great because You know, there's a downturn. We're not using the product. And they…”
Insight
Ramanujam: Effective B2B value selling requires creating needs rather than discovering them
“Many founders show up and try to understand what are the needs of the customers. That's one way to look at it. But you need to be able to create needs rather than just discover them, right?”
Insight
Ramanujam: POCs should co-create ROI models rather than test feature functionality
“The right way to think about an ROI model is to actually co-create it with your customers from day one, which means You know, agree and validate on the assumptions and the inputs. So like, Hey, how long does this process take today? How many engineers are ther…”