1mGTM #5 - Revenue Models

Hey folks,

I am back with the One Minute GTM tip for y’all. This week we look under the hood of Pricing and the more fundamental decision of choosing your Revenue Model.

That’s my desperate attempt at reducing the amount of SaaS products, that are not really fit for this Pricing model.

The way you charge customers isn’t just a pricing decision—it shapes your entire business strategy. Pick the right revenue model early on, and you’ll accelerate sales velocity and strengthen your market position.

Evolving Revenue Models

• Ownership: Customer owns the product in as-is state (eg. perpetual licence, goods, art). Default for physical goods.

• Subscription: Customers pay recurring fees for ongoing access (e.g., Netflix). Reliable for continuous value delivery, but watch out for subscription fatigue.

• Consumption-Based: Fees scale with usage (e.g., AWS). Great when product usage varies, aligning costs directly with customer needs.

• Impact-Based (Emerging): Customers pay for actual results. This model transfers much of the risk to the seller and assures the buyer they’ll see ROI before paying.

Shifting Risk from Buyer to Seller
Traditional perpetual licenses pushed all risk onto the buyer. Modern models—subscription, consumption, or impact-based—share or fully shift that risk.

Customers now expect measurable value, and vendors must prove their worth.

When Subscriptions Get Old
Many users, including myself, are tired of juggling endless monthly fees for tools they barely use. Subscription makes sense when your product can demonstrate ongoing value.

For occasional usage products, where value is delivered ad-hoc (think almost all AI products), consumption models may feel more honest and cost-effective to customers.

Who needs another $5/m subscription, right?

Subscriptions often place a disproportionate financial burden on low-frequency users, allowing heavy users to quickly get their money’s worth.

This misalignment reduces a business’s incentive to support its most engaged customers, ultimately proving counterproductive.

The Promise of Impact Pricing
Charging customers only when they see concrete results sounds ideal. It perfectly aligns seller and buyer incentives. But defining and measuring “impact” can be tricky.

Many companies try and start small, offering partial refunds or performance guarantees before fully committing to a pay-for-results model.

And there are the types of market movers, like Salesforce, who dive head first and revolutionize the whole industry once again, shifting the whole business model to Pay-per-use (a proxy to Impact Pricing).

Why It All Matters
Your revenue model sets the tone for everything else—GTM plans, KPIs, team structures, and operational strategies.

Get it right, and you’ll streamline growth.

Choose poorly, and you’ll battle churn, misaligned incentives, and slower sales cycles.