Every software company is having the same debate right now: seat, usage, outcome, or token. Which metric captures the most margin? It feels like a problem you can actually solve, but no metric alone can maximize margin.
Picture a well and a bucket. The water in the well is the value you create. The depth of the water depends on one question: can a buyer get the same outcome somewhere else? The bucket is your price metric. It shapes how much you can haul up per sale.
If the buyer has real alternatives, the water is shallow. Margin compresses no matter how elegant the bucket. An outcome-based commodity is still a commodity. Think Uber ride or DoorDash delivery.
If your value advantage holds, the water is deep and you focus on the bucket. Metric choice becomes the difference between capturing some of the available value and capturing most.
Your competitive moat sets how much value there is to capture. Your metric determines how much of it you collect. A dry well can’t fill your bucket. And AI is draining wells everywhere, lowering the cost for competitors to mimic your product.
So before your next seat-vs-usage-vs-outcome meeting, ask the gating question: how deep is our advantage? If it’s deep, refine the metric and win. If it’s shallow, no metric can save you.
