Static pricing is coming to an end and the age of monetization change is upon us. Especially in SaaS, companies are adopting more modern, mature pricing and packaging as a way to keep up. But this fundamental shift in pricing has downstream implications for revenue leaders, the tech stack, compliance, and even how we handle accounting.
To better understand how revenue leaders are navigating these shifting monetization needs, I recently sat down with two experts in the space: Jagan Reddy, CEO of RightRev and Meredith Schmidt, EVP at Salesforce Revenue Cloud. Read on for the top takeaways from our webinar:
1) Revenue leaders face challenging mandates as consumption pricing rises
The fall of static pricing is largely caused by the rise of consumption (i.e. usage-based) pricing. “Every company is jumping on the bandwagon, and we saw this coming,” says Meredith. But that means a lot of change for revenue leaders. And since revenue is a uniting process across companies, that includes everyone from finance and IT to sales and customer success.
There are four key mandates that are challenging these leaders:
- Increase seller efficiency – This impacts not only sellers, but everybody in that value chain.
- Grow new revenue streams – Subscriptions have always been around, but now there’s combinations of subscriptions plus consumption.
- Adapt products and pricing fast – How do you update your systems to go to market quickly, price fast, and adapt your products?
- Manage economic uncertainty – Whether it’s competitors, tariffs, or other economic challenges, there’s a lot coming at us every day.
2) The rise of consumption pricing comes with unique pain points to solve
The mandates revenue leaders face continue leading us down the path of consumption pricing, but a number of pain points accompany this shift. Jagan and Meredith named a few:
Creative Deals Have Downstream Impacts
Customers are asking to buy on their terms, and companies want to be able to say “yes, we can bill or charge however you want” and win the deal. But what does that look like when you move past a simple Pay As You Go model and start adding complexities like ramps, bundles, discounts, etc.?
Predictability is Weakened
Forecasting revenue grows in difficulty when moving from traditional SaaS to hybrid (or even moving from one-time purchase to SaaS). When consumption can flex up and down each month, it becomes more complex to calculate how much you expect to make. Even more so when the pricing model moves beyond simple Pay As You Go and starts adding things like commitments, overages, and tokens.
A huge amount of data is needed to forecast in these complex situations and no spreadsheet is going to cut through.
Complexity Creeps In
When shifting toward consumption pricing, leaders might wonder: What will this move do to my RPO? How do I pay sales compensation? What’s my opportunity amount? How can our FP&A teams give guidance? How do we recognize revenue? How do we keep up with changing regulations?
All of these are fundamental shifts in how a business is run.
3) New regulations mean balancing compliance with flexibility for customers
While contract terms have historically been specific to every business and customer—how they negotiate, how they price and package, etc.—Jagan notes that new contract standardization regulations are forcing certain contract terms. A new regulation in the EU, for example, requires that customers should be able to easily cancel long-term contracts. In other words, no more forcing customers into multi-year contracts.
How do your internal processes and tools handle both 1) customers’ demands for flexibility and 2) changing regulations? Both your back and front office processes need to be set up to sell the product to the customer the way they need and meet compliance requirements.
4) The move from subscription to consumption fundamentally changes how accounting is done
With subscriptions, companies can focus on their end of month processes. But with consumption, it’s continuous—not just daily, but constant flux. That means rev ops and finance teams have to handle the accounting differently.
We’ve seen many businesses try to fit new sales motions into existing processes and fail miserably; on operational efficiency, on closed processes, and on customer satisfaction. Jagan notes that this is where the old tech stack and existing processes will not cut it for the new sales motions and product launches we’re seeing that utilize a consumption-based model.
Even if two companies are selling identical products, their quote-to-revenue processes will be different. Their pricing and packaging will be different. Jagan recommends to look for a platform that makes it easy for you to model your business use cases and achieve a higher percentile of automation.
5) Disconnected systems break the quote-to-cash process
Think about the “messy middle” that your data has to flow through currently. So many companies are cobbling together point solutions. Others are still doing revenue on spreadsheets. But Meredith points out the risks that come with disconnected tools: Revenue leakage, incorrect billing for renewals, etc.
Every piece of this diagram shows a customer touch point. You want all of that data accessible in one place, so everyone from collectors to sellers can get answers to their questions without going to finance.
Why should Quote-to-Cash live in the CRM? Because that’s where your customers are. This is a fundamental change in how finance teams are used to operating. Many used to view the ERP as the source of truth, but as creative monetization models arise and complexity ticks up, having the data live in the CRM creates organic connective tissue in the data. That means fewer band-aid fixes and rebuilding custom code.
As Meredith puts it, “Let your ERP do your accounting for you, but run your business with your customer in the CRM.”
6) AI doesn’t replace judgment in revenue recognition
According to Jagan, 20% of your transactions create 80% of the operational issues. But since sales wants to do whatever it takes to sell and customers want to buy with the best price and packaging, there’s really no way to avoid these non-standard use cases.
We are at the stage today where AI doesn’t replace judgment in revenue recognition. Instead, he says, it’s augmenting the accuracy, speed, and auditability, giving finance leaders faster insight into revenue drivers.
At RightRev, for example, we don’t want any AI judgment to be happening, but we want our AI to deliver operational efficiency to finance leaders. We’re helping users create AI agents to look for non-standard contracts and go through checklists, but the user still takes the action of deciding what to do with that information.
What’s the next stage for AI in the revenue recognition process? Jagan believes it will be based on building a transaction context awareness system—something we already have in the works with Salesforce Revenue Cloud Advanced (RCA) and Revenue Cloud Billing (RCB).
7) A unified revops engine solves these challenges, powered by Salesforce + RightRev
Amid the complexities that accompany these new monetization models, Salesforce Revenue Cloud and RightRev have teamed up to create one platform for the entire Quote → Cash → RevRec lifecycle.
Salesforce Revenue Cloud with Revenue Cloud Advanced (RCA) and Revenue Cloud Billing (RCB) was designed to make sense of that messy middle for your data. When combined with RightRev, it provides the architecture and composability that allows you to satisfy all of the needs Jagan and Meredith discuss throughout the webinar.
AI is most powerful with data, and as Jagan notes, the combination of the platform and Agentforce—on top of all the data from the entire lead to revenue and cash process—is where the magic happens.
For more insights on how evolving monetization needs are changing quote-to-revenue, plus practical advice on applying these ideas to your business, check out the full webinar with Jagan and Meredith.
