As AI introduces new variable costs, the pricing models for enterprise software are evolving. Traditional models such as perpetual licenses (a one-time fee for the right to use software indefinitely) are declining in favor of software as a service (SaaS) and, increasingly, consumption-based pricing, explain McKinsey’s Jeremy Schneider, Joshan Abraham, Matt Linderman, Naveen Sastry, and coauthors. The number of software companies using consumption-based pricing more than doubled between 2015 and 2024. Software businesses that successfully adopt consumption-based pricing aligned with usage and outcomes may be better positioned to capture AI-driven value and differentiate themselves in a rapidly evolving market.
To read the article, see “The AI-centric imperative: Navigating the next software frontier,” October 16, 2025.