AI startup Sierra -- founded by Salesforce's former Co-CEO & already valued at $4.5B -- just announced they're all-in on outcome-based pricing.

Look, I wish I only had to pay for software when it delivered results.

But the reality is that true outcome-based pricing won't work for 90% of *today's* products. Here's why ⤵

Intercom's AI pricing went viral last year. They were charging $0.99 per AI-driven resolution. A number of others (Sierra and Zendesk included) have followed suit.

This model changes the relationship between customer and vendor:

👉 There's zero risk to trying out a new product

👉 The more you use the product, the more ROI you generate

👉 The vendor becomes 100% focused on delivering outcomes

👉 The vendor can get big $$$ since the upside is uncapped

The issue is attribution.

You want the customer to get a fantastic outcome -- and you want them to recognize that your product powered that outcome.

As soon as you start charging for success, the customer begins to rethink the results.

-- Did your product really drive the outcome?

-- Or did they drive the outcome (with a small assist from the product)?

If your product relies on people to change their behavior in order to generate ROI, then success-based pricing could set you (way) back.

Ensure that your product is able to own the service end-to-end and that you’re able to align on measurement upfront.

But for now, you’re (probably) better off charging for *work delivered* rather than *business outcomes* unlocked.