The SaaS world already has a lot of metrics, and most companies are still working hard just to calculate the core metrics correctly. But AI is changing the cost structure underneath SaaS unit economics. Traditional software LTV assumes that gross margin is reasonably stable across your ENTIRE customer base. That assumption breaks when customers pay […]
How to Build an Outcome-Based Pricing Plan
Outcome-based pricing is easy to describe and hard to operationalize. The headline is simple: customers pay when your product delivers a defined result. The mechanics are a bit harder to define. You must define the outcome, prove it happened, decide what does not count, choose dollars or credits, handle the onboarding period before outcomes flow, […]
The Death of Per-Seat Pricing: What It Means for Your SaaS P&L
Per-seat pricing isn’t dying quietly. It’s being replaced in real time, and the financial implications for legacy SaaS companies are significant. Don’t ignore these market shifts if your product is a candidate for hybrid or outcome-based pricing. Bloomberg is forecasting that subscription-based pricing drops from 60% to 30% of SaaS models over the next decade, […]
What Your MRR Schedule Isn’t Telling You
Most SaaS companies already have the data they need to understand their revenue base. It’s sitting in their billing system, invoice exports, MRR schedules, CRM, and financial statements. The problem is not always more data. The problem is structure and data coordination. For years, we have used customer revenue data to build MRR schedules, ARR […]
How to Calculate the Inference Efficiency Ratio
If you built your SaaS finance metrics stack before 2025, your SaaS P&L is missing a line item that is quietly destroying gross margin for hundreds of companies right now. I’m talking about inference cost (aka AI token costs). The per-token, per-call expense of running LLM-powered features inside your software product. It’s not hosting. It’s […]
What Should Be Included in AI COGS
If you’ve added AI features to your SaaS product in the last 18 months, your gross margin probably looks different than it used to. Maybe you haven’t noticed because you haven’t mapped AI costs to COGS. Or maybe you have, and you’re trying to figure out what’s normal. Either way, you need a framework. My […]
The Four Layers of AI Measurement: A CFO’s Framework
AI agents are doing real work now. They are resolving support tickets, updating CRM records, drafting journal entries, reviewing contracts, and shipping code. The inference bills are growing. Productivity gains are improving. The org chart mix is shifting to digital labor. But most SaaS and AI companies still cannot report the work their AI is […]
Your AI Feature Is Quietly Destroying Your Gross Margin
If you are infusing AI into your SaaS product, there is one finance mistake you cannot make: Treat AI costs like traditional SaaS COGS. The P&L math did not change. But the inputs changed. That matters because the classic SaaS model was built on high gross margins and low marginal cost. Add AI inference costs, […]
A CFO’s Guide to Tracking Digital Labor and Agentic AI
Your ROSE Metric may be improving for the wrong reason. For years, the ROSE Metric has been a useful way to measure how much recurring revenue a SaaS company generates for every dollar invested in employees and contractors. It is one of the cleanest ways to connect labor investment to recurring revenue. But AI is […]
The SaaSpocalypse: AI Agents, Vibe Coding, and the Changing Economics of SaaS
Over the past few months, a new phrase has been circulating across tech, venture capital, and public markets: “The SaaSpocalypse.” The narrative is straightforward, and a bit alarming for SaaS operators. What’s real and what’s clickbait? We know this. AI agents are improving rapidly. Coding tools can generate entire applications. AI can automate workflows once […]