For the last 15 years, software investors and acquirers have consistently valued steady, high-margin SaaS recurring revenue far more than variable, transactional revenue.
Predictability wins. Low churn wins. Software businesses that don’t fall off a cliff during a downturn win.
Customers like predictable costs, too. Nobody wants surprise usage fees blowing up the budget.
But AI is putting real pressure on the classic SaaS pricing model.
AI changes the economics in three big ways:
- AI transactions have real marginal costs. Inference isn’t free, as SaaS usage has been.
- AI drives real work and real value. It’s not just a system of record anymore — it’s a system of action that replaces human labor at scale.
- APIs, not users, often drive value. Pricing by seat doesn’t make sense when value comes from workflows, tasks completed, or tokens used.
But I don’t think we’re headed toward an “all transactional” world.
Recurring SaaS revenue models aren’t going away.
Here’s why:
- AI costs will fall dramatically as models get faster and cheaper.
- Customers still prefer predictable, budgetable pricing — even if usage varies.
- Founders and CEOs value steady revenue streams, as long as their cost structure doesn’t explode.
- When tokens get cheap, value-based pricing gets harder, and competition increases.
- API usage has always been transactional anyway — AI makes it more visible.
So what’s emerging right now is a hybrid model for recurring SaaS revenue for the system of record + transactional revenue for the “system of action” that actually does the work.
Even OpenAI — the poster child for usage-based AI — reportedly still gets 50–75% of its revenue from user subscriptions, not API transactions.
Will the future be mostly API-driven software with little UI and lots of metered usage?
Maybe. But we’re not close to that yet.
For most SaaS + AI founders, the real opportunity is figuring out the right hybrid pricing model that aligns value, cost, predictability, and simplicity — without blowing up margins or confusing customers.
And acquirers and public investors will still discount unpredictable revenue and reward revenue with lower gross margins.
They know the difference between sticky recurring revenue, very variable transaction revenue, and more predictable transactional (“re-occurring”) revenue.
Where do you think this is going?
