The licensing value-chain and how AI is changing it

AI is changing the way we build software, use software, but also the way we license it.

Generally, we see a shift from the classic seat-based SaaS model to usage-based and even to value-based models.

I define the licensing value-chain as follows:

1. Seat-based - Pay for what you can potentially do

2. Usage-based - Pay for what you actually do

3. Completion-based - Pay for your completed tasks

4. Value-based - Pay for value delivered

   
   

As AI agents automate entire workflows, the software layer (input screens, tables, dashboards, etc.) becomes unnecessary: users state their intent, and the agent delivers. We see this now in certain domains like coding or marketing, and we'll see it more in other domains, like logistics and procurement.

Remember, average gross margins in the SaaS business typically range between 70% and 85%, meaning vendors have significant room to work with.

Interestingly enough, this is also part of the shift that we started seeing in human-labor in recent years, where in some cases the focus is on outcomes delivered and not hours invested - such as work-life balance, working from home, or unlimited PTO.