> [!meta]- Document Info > **Author**: [[Akash Bajwa]] > **Full Title**: The End of ARR > **Category**: #articles > > **Summary**: Akash Bajwa discusses the shift from traditional software pricing to consumption-based models, highlighting Salesforce's new pricing for its Agentforce service. This change reflects buyers' preference for paying per conversation, which aligns value more effectively by reducing reliance on expensive labor. As this trend grows, vendors will need to adapt their forecasting and billing practices while reassessing key enterprise software metrics. > > **Source**: [Original URL](https://akashbajwa.substack.com/p/the-end-of-arr) ## 📄 Full Document → [[The End of ARR]] ## 🔦 Highlights & Commentary - The speed at which incumbents are adopting consumption pricing is indicative of the fact that any cannibalised seat revenues will be more than offset by agent consumption revenue, which aligns value by replacing more expensive labour. ([View Highlight](https://read.readwise.io/read/01jbw1n6m5deky7rae70hrcdq3)) - Note: The bet: revenue from agent consumption via smaller segment of higher-adopting subscribers will offset cost of underutilized seats. - Buyers will discern whether they derive value from agents **completing work or on a success basis.** ([View Highlight](https://read.readwise.io/read/01jbw1s15d53hrae2caxdwfb8g)) - Note: Akash talks about this as "software augmenting workers to replacing them." I'm not so sure this is entirely the case. There's a lot of bloat in the seat-based model, consumption based units of value force us to reckon with this (e.g., "cost"). - Hybrid models are likely to prevail over pure consumption or seat-based models in the medium term. In that scenario, investors will need to assess top-line revenues that are a combination of recurring revenue (and all the beneficial properties that entails) and consumption revenue (with the volatility that brings). ([View Highlight](https://read.readwise.io/read/01jbw1zekrda3r68nevxam4dng))