I love pushing outcomes and have even thought about pricing my product based on outcomes. The challenge with many products is that “outcomes” can be tricky to evaluate and the causality difficult to attribute accurately. In our particular case, the feedback loop is measured in years or decades. Instead, insights are available almost right away ¯\_(ツ)_/¯
Agreed, outcome based pricing is hard if the customer has complete discretion over whether the outcome was achieved. Even so, many new AI companies are priced on outcomes and it works well, as long as the price is high enough.
Even with outcome based pricing you can ask for payment up front (at least partial). I see a lot of AI companies do that, with a $250k ACV and 1/2 up front.
Ok I hadn’t considered that (tho i get the model) if the target is analyst headcount reduction. But the real outcome is investment and (long loop) better investments.
Agreed, but investors would never buy that. If they did, they would admit they weren't necessary. And, if you could deliver that outcome, you wouldn't sell it!
I love pushing outcomes and have even thought about pricing my product based on outcomes. The challenge with many products is that “outcomes” can be tricky to evaluate and the causality difficult to attribute accurately. In our particular case, the feedback loop is measured in years or decades. Instead, insights are available almost right away ¯\_(ツ)_/¯
Agreed, outcome based pricing is hard if the customer has complete discretion over whether the outcome was achieved. Even so, many new AI companies are priced on outcomes and it works well, as long as the price is high enough.
As long as the price is high enough or the outcome is legible enough?
Does it matter how high the price is if you can never show an outcome or enough of them?
Even with outcome based pricing you can ask for payment up front (at least partial). I see a lot of AI companies do that, with a $250k ACV and 1/2 up front.
Agreed! So we are selling insights right? :)
I get your point tho.
Ok I hadn’t considered that (tho i get the model) if the target is analyst headcount reduction. But the real outcome is investment and (long loop) better investments.
Agreed, but investors would never buy that. If they did, they would admit they weren't necessary. And, if you could deliver that outcome, you wouldn't sell it!
In my experience, the outcomes that matter are the ones that get the buyer promoted at their company.
The second one sounds like an outcome. The first one, not so much.
Analysts are measured by how many investment targets they identify. By committing to N it is an analyst headcount equivalent.
Can you share which companies or what kind of outcomes they are offering?
I'm not sure I can share specifics but I'll check. The short version is that they often sell like consulting companies:
- A company that sells to hedge funds and commits to identifying N target investment options
- Workflow automation that commits to outperforming the accuracy and throughput of human workers, leading to a N headcount equivalent productivity
This is a helpful post! Thanks Sean.