Strategic Pricing in the Age of Generative AI: A Fractional CMO’s Guide for Enterprise Software

As the integration of generative AI (gen AI) into enterprise software continues to gain momentum heading into 2024, fractional Chief Marketing Officers (CMOs) are uniquely positioned to navigate and influence the evolving pricing models. This blog explores key actions that fractional CMOs should take to effectively support and optimize the pricing strategy for gen AI in enterprise software.

Embracing Gen AI as a Market Differentiator

As gen AI becomes more embedded in enterprise software, fractional CMOs need to understand its impact and position it as a key differentiator in the market. Deloitte’s forecast indicates that by the end of 2024, gen AI will be a standard feature in many enterprise software offerings. Fractional CMOs must therefore:

  • Communicate the Value: Articulate the unique benefits of gen AI features in enterprise software to both internal stakeholders and customers.
  • Educate the Market: Develop content and campaigns that educate the market about the advantages and efficiencies brought by gen AI integration.

Developing Flexible Pricing Models

Given the diverse range of potential pricing models for gen AI features, from per-seat to consumption-based pricing, fractional CMOs should:

  • Analyze Market Trends: Stay abreast of how competitors and the broader market are pricing gen AI features.
  • Collaborate with Product Teams: Work closely with product development teams to understand the costs and value proposition of gen AI features, informing pricing decisions.
  • Test Pricing Models: Experiment with different pricing models to find the most effective strategy for the market and customer base.

CMOs can also help to set realistic targets, based on an understanding of en AI’s market potential and adoption rates, and monitor performance metrics, by keeping a close eye on sales and customer adoption metrics, to support htese pricing models.

Guiding Product Positioning in Key Sectors

Fractional CMOs should identify and target key sectors where gen AI can have the most significant impact, such as:

  • Enterprise Productivity Suites: Position gen AI as a tool for enhancing productivity in the workplace.
  • CRM and ERP Solutions: Develop targeted messaging that highlights the benefits of gen AI in these applications.
  • Engineering and Development Tools: Create case studies and demonstrations that showcase the effectiveness of gen AI in these specialized fields.

Balancing Cost and Customer Perception

Understanding the operational costs of gen AI and its perceived value is crucial. Fractional CMOs must:

  • Align Pricing with Perceived Value: Ensure pricing strategies reflect the value that customers place on gen AI features.
  • Advocate for Customer-Centric Models: Propose pricing models that align with customer expectations and willingness to pay for additional gen AI functionalities.

Preparing for Future Trends and Regulations

Looking ahead, fractional CMOs need to prepare for changes in ROI, regulatory landscapes, and market dynamics by:

  • Staying Informed on Regulations: Keep updated on regulatory changes that could affect the use and pricing of gen AI.
  • Adapting to Market Shifts: Be ready to adjust pricing and marketing strategies in response to evolving market conditions and technological advancements.

Conclusion: Navigating a New Era of Enterprise Software

For fractional CMOs, the rise of gen AI in enterprise software presents both challenges and opportunities. By strategically positioning gen AI features, experimenting with flexible pricing models, and aligning with customer perceptions of value, they can guide their organizations toward successful adoption and monetization of this transformative technology. The next few years will be crucial in shaping the enterprise software landscape, with gen AI at the forefront of innovation and market competition.

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