Notion: Why Notion’s Pricing Works Better Than Most SaaS Companies

Notion has tens of millions of users. A huge chunk of them have never paid a dollar.

And that's completely intentional.

In our latest Pricing Page Unpacked episode, we dig into how Notion turned free personal users into an organic growth engine — and how that freemium model quietly spread the product across teams, departments, and entire organizations.

We also get into the harder questions:

• Is Notion AI priced correctly now that it's bundled into higher tiers?

• What does margin pressure from AI mean for SaaS pricing broadly?

• Is Notion leaving money on the table — or playing a longer game?

One of the most thoughtful pricing pages in software. Here's what's behind it.

For more information, catch us on https://www.willingnesstopay.com/

Transcript

SPEAKER_00 0:03

Welcome to Pricing Page Unpacked. I'm Rob Litterst and I'm joined by Ori Glerkoff Schmidt, pricing expert and a CEO at Willingness to Pay. Each week we take a real company's pricing page and break it down. The decisions behind it, the trade-offs, and what it tells us about how the company actually wants to grow. No slides, no scripts, just a real conversation between two friends who live and breathe pricing. Let's dive in. Uric, I am especially excited about this one today because Notion is a product that I use constantly. So I'm very excited to talk to you about their pricing.

SPEAKER_01 0:37

Yeah. It's hard to miss, right? It's everywhere. And it was one of these products that you kind of had the Google Docs and Sheets, which was free, and then suddenly like they just managed to like get into the market anyways with a paid version just by having, I think you can argue like, but maybe you actually start like how do they manage that? Like I'm not a we we don't use Notion internally for various reasons, but but uh but you do. So tell me why is it worth the money?

SPEAKER_00 1:09

Well, I think what's really interesting is they kind of like came to market as like a note-taking tool or kind of like an alternative to a note-taking tool, right? And I I remember this like really, really well because everybody was using Evernote back when Notion came around. And Notion and Evernote both had like a somewhat cheap kind of like personal plan. And at one point, Notion just decided to like make the entire personal use case and personal plan free. So they just decided we're gonna commoditize the personal user and monetize teams and organizations. Like we don't care if like individual users pay us, like we just want as many of them as possible because that will like ultimately help us adopt and grow our kind of like target accounts and grow our actual enterprises that are using our product. And I thought that was a really interesting approach and it's clearly paid off. Um, the other thing about Notion that I think is so interesting is they have a massive organic community of users who show you how to use Notion. And I think there's there's this like idea of like opinionated versus unopinionated software. And I think Notion has their opinions, right? Like that they build software in a in a thoughtful way, but for the most part, like their product is kind of unopinionated about how you use it. It's kind of like a broad tool and you can do a bunch of different things in there. And I think products like that are incredibly ripe for communities because then you let all of your users create kind of like the opinionated ways to use it, right? It's like, well, this productivity expert thinks that you use it this way, and like this guy who's like a database expert in Notion uses it this way. And so you have all of these people who have kind of like built a livelihood off of like Notion YouTube tutorials. You know what I mean? So it's like they have this like massive, massive community of people who use it. I use it um for primarily like as a writing app and as kind of like a knowledge management app to replace something like I know at HubSpot for our wiki, we used like Confluent, and that feels a little bit too big and clunky for me. So so John and I use Notion as kind of like a place for shared docs for pricing SaaS. And I find myself drafting LinkedIn posts there and newsletters there, um, basically anything that I'm gonna write or anything that I'm planning on the content and partner side, we store in Notion. And it's kind of like our single source of truth for all of that sort of stuff.

SPEAKER_01 3:32

So I actually a lot of our clients use it, obviously. So we get to be invited for a lot of these sort of workspaces, and it's uh it's um it has sort of a very modern feel to it. It's like compared to many of the of the other other types of uh especially if you go to something like Teams workspace or or even a Google Docs workspace. Like it like it's it feels yeah, it feels more more mom. Um okay.

SPEAKER_00 3:57

Let's let's show me the pricing page. Let's jump into the pricing here. Yeah, let's jump into the pricing page. I'll share my screen right now. Okay.

SPEAKER_01 4:04

So like it's been going for what 10 years? A little bit more.

SPEAKER_00 4:08

Yeah, I would say more or less. So yeah, let me here, let me give like a quick background. So founded in 2013 in San Francisco, um, Ivan Zhao is a CEO. Um, Notion Workspace was kind of like their initial launch, all-in-one productivity platform with notes, docs, databases, tasks, project boards, and wikis. Um, Notion AI, which we will get to, is um their kind of like next level tool and really what they've been pushing big time lately. They also have a lot of templates and databases, like I mentioned, and they are an incredibly extensible platform. They integrate with everything, um, which is very, very cool. Right now, they have over 100 million users, um, broad adoption across startups, S and Bs, and large enterprises. Um, I think projected 2025 ARR is around 600 million. They um are still private, but I think they're that could potentially change. Uh, I have no inside information, but I I know they are one of those companies that gets whispered about IPOing in 2026.

SPEAKER_01 5:08

Um just like high-level just like observation. Uh 600 million revenue on 100 million users is low. If you had to guess, like, hey, there's gonna be a software and it has a hundred million users, like what's their revenue? You probably guess at higher than 600 million, right?

SPEAKER_00 5:27

100%.

SPEAKER_01 5:28

Yeah. So it's one of these where they're riding like a success wave that is that is based off of providing more value than they extract. And then, yeah, so so uh and then we can 100%. I guess we're gonna discuss whether that's a good idea or not, but uh, but uh let's take a little guys.

unknown 5:43

Yeah. Okay.

SPEAKER_00 5:44

Yeah. I mean, I think like one of the first things that I wanted to talk about is their free plan and how much they give away in their free plan. So I think like what what you're saying, uh like the reason that that number is like six dollars per user or whatever it is, because they give away so much for free. And so like personal users pretty much never have to pay for Notion unless they are uh a power user, at which point they would pay for plus. But on my so like I use it for personal stuff and then I use it for business stuff, and I've never paid for it as a personal user. On the business side, I do because we have like some integrations that we wanna that we want to use and that sort of thing. But um they give away a lot for free. And I think like to your point, Ulrich, around like giving away more value than um they're capturing, like they acquired this company cron, which was like superhuman for calendars, right? So like cron was basically trying to be like the um the best calendar app. Notion acquired them, and cron used to charge, I believe, like a monthly fee for their calendar. Notion acquired them and doesn't charge for using them at all. So it's like uh it like they are very clearly, I think. And then they launched um an email competitor. I think they are you can see here it syncs with Gmail, but like I immediately think like Notion is totally going after kind of like the Google workspace crowd and trying to tap into that and like get people on like Notion for everything, right? And to do that, they are giving pretty much everything away.

SPEAKER_01 7:07

So 600 million and then the plus plan is 120 a year. So that's ends up being 20 times six, right? Which means that if we just even ignore that we have users that are more expensive than business enterprise, that would mean that 95% of at least 95% of users are free and only 5% are paid, which is like on a freemium product, kind of okay. Like usually you'd say that 2 to 10% is sort of what you would want to have, like upgrade to a paid version. And now it sounds like it's yeah, between two and four percent, maybe that have some sort of pay plan. I mean, I use to to keep the analogy right, I use uh uh the Google sort of workspace. We do it professionally, but I also I also use Gmail privately, and way before I started to pay for Google Workspace, I also privately started to pay for Gmail because of storage limitations, right? So Gmail and with the spreadsheets and the Google Docs and all these, famous is hey, all this is for free, but you know, when you when you store your whatever millionth cap picture or clown zip or whatever it is, you're gonna have to start to pay, right? And then it was like, okay, it's gonna be like two bucks. I'm just sure. Like, here's my credit card. And so I think actually if it's interesting, and I don't know if if this is also the case with Notion, like if they even have this sort of limitation model on the storage or any other kind of usage, even on the free plan, or whether they want to have that sort of more active, hey, I want more functionality, so I'm now gonna pay, or I am now in a team, so there's a different use case, and I'm now paying for sort of the collaboration stuff. Um so, or if they're just gonna say, no, storage is free, um, so we're just gonna keep it like truly, truly free if you're not using it for anything other than this stuff.

SPEAKER_00 8:58

Yeah, to your point, I think like they are totally comfortable giving Notion away and and and your math I think checks out. I I remember doing a deep dive on Dropbox and finding that like I think 90, like 98% of their users are free or something like that. It's it and it's it's like the uh the gift and the curse of PLG, right? It's like you get all these users, but then actually getting them to pay for something is so hard. And I think you just pointed out like the kind of like value ladder for Notion is like either you join a team and you need it for your workspace, you want to use AI and and you need uh you need like sophisticated AI usage, as you can see on the page right now. Like they only offer a trial um in the free and plus plans, or you are you're tripping volume limits and you're just like a power user. Um, it seems like that's kind of like what they're what they're going after there. I guess integration is kind of plays a role in it as well. Um, but those are like the big things it seems like that they're actually monetizing for the vast majority of people um who are using Notion as kind of like a workspace or note-taking tool, they can get away with using it for free. The big thing that I that I I think would be interesting to talk about, Ulrich, is their kind of like shift in narrative to AI. Um, Notion, I think, has made a really, really big push um towards AI and has really started kind of structuring their broader product around it. And they are kind of like at the center of this conversation that I've been seeing of like, you know, you're you're damned if you do, damned if you don't. If you're if you're a SaaS company right now and you have an AI narrative, then you are inherently going to have worse financial metrics, right? And you're not going to benchmark against the traditional SaaS gross margins. Um, and I think this was really well articulated by Ivan Zhao, their founder, uh, in a Wall Street Journal article from a few months ago. He talked about how they used to have no uh margins around 90%, but now around 10 percentage points of that profit go to AI companies that underpin Notion AI. Um, and I think like the good thing about that is that people are actually using their AI products, right? So like if if their margin has come down that much, it means that people are actually using it. Um, but they have really made a push to kind of structure their entire product around AI. And a quick backstory on what they've done. They started with an add-on that you can see here of $8 per month. And basically you could apply that to any of their plans. And they have since bundled it into the business and above tiers. Um, so it used to be something that anybody could add. Now it is bundled into the business plans. And I don't see the ability to add it. For a while, anybody could still add it, but it looks like they might have gotten rid of that and it's kind of like bundled into the core of business. Um, but yeah, I guess I'll pause there and and I'd love to hear what you think about this kind of like idea of starting with an AI add-on and eventually integrating it into business.

SPEAKER_01 11:59

Before I do that, I I just want to I just want to pause on some of the math there because Ivan has a point where it's like, okay, so before we had 90% margins, now we have 80% margins because we pay a ton of money to to the so if they do what was the 600 million, they pay 60 million a year. So that's what, five million bucks a month to power the AI functionality for the users, right? And that probably goes to whatever OpenAI or one of the others, right? This is a common like trend in a lot of these companies is that like we were doing fine and suddenly the market demands AI, or at least we don't have the guts to not offer it. So now we're offering it and like everything now tank. And so the gross margins are compressed, but also we are now forced to do a lot of internal restructuring on the product side. We have to come up with new ways of selling this. None of those things are free either, by the way. So it's like this sort of compression of margins overall. Because if you go from a 90% to an 80% profit margin, you would offset that you'd have to double the prices to get back to 90% on that new cost base. So since they haven't, I think the economics is not going to change, meaning that it's not like private enterprise is suddenly going to, okay, they would just don't make money anymore. Like they they might find a way, right? And if the underlying cost structure is what it is, something has to give. And either we raise prices again, we double prices. So and then you could argue that well, the value double. Like if the if the AI functionality, at least in some of the instances, is going to make the products twice as valuable. So now consumers and businesses just have to pay for that, and that's just like a normal part of technical evolution. Or we are going to have to, in order to offset this market compression, find other ways to do business, which means that we're going to have to find other ways to sell this stuff, we're going to have to find other ways to do product development. It has to come out of somewhere, right? So so that might also be where it's at. But I think the cat is still inside the box. So we haven't sort of figured out which direction we're going to go. And probably we're going to go in many directions. But I think the funding sort of gravity scenario is that like margins can't just be compressed and profits disappear from the market. Then like something's got to give, right? Right. Or or they're going to like some is someone is going to leave the market and then the remaining parties will just raise prices again. So so I think that's sort of just at it at like a strategic business level. I think I think right now everybody's just like playing the game, but like, let's just buy more time and we'll see where this goes. So when they then uh like throw the add-on in there, I think it's again one of these, like say, let's see how customers react to this. The good thing is that you can do it fast, it's relatively easy to make that internal decision, and you can see which customers actually have a real need for it. It's going to be a subset of customers, and that subset is going to be very AI forward or at least curious. And then you have you can have deep sort of product conversations with those customers. So they also almost function like a beta like test group on that sense. So that means that you can keep it sort of compartmentalized. It doesn't it's it's because it's such a small user base, it doesn't sort of blow up the budget, and you can uh you can create sort of terms and conditions changes to that product um without interfering with the sort of the broader user base. So it's it's a good way to sort of get started and test something. Also, it makes it almost impossible to adopt across the entire product and almost impossible to then monetize across the entire product, which is why I think they then make the change where they say, okay, uh version two, we're just gonna include it over here. And we're gonna include it in two ways. We're going to uh include it for business and enterprise users, and then we're gonna include some of it like a free free trial in all of the products. So this is what I call sort of the utility model of uh of I use it a lot with AI, but also sometimes with other functionality, which is like when you buy a house, it already has like water and electricity included in it. That doesn't mean that water and electricity is free, but you don't pay until you turn it on. But it's not a it's not a specific choice of whether I want to have water and electricity. It's like it comes with the house. So here AI sort of comes with the house, it comes with the free plan, it comes with the plus plan. And then if I turn it on, I pay. But it's no longer sort of a separate product that I need to add on to my existing plan. And I think this is this is a what I would call sort of a fundamental best practice of AI because it means that adoption is incredibly easy compared to having it as a separate uh SKU outside of it. Um in this way. So I think that's that's sort of a nicely played. And then um, yeah, how how do they then price it? Is it a credit system or how do they do it?

SPEAKER_00 17:08

Right now it's so right now it's interesting. And yeah, yeah, I I think you touched on um like the kind of classic like add-on sandbox, and then I think Notion realized, oh, we actually need to go all in on this and um we're gonna bundle it into everything. Um right now it's bundled into the business plan, and then I think they charge separately for agents, which we can get to in a second, um, because there's some interesting data on that. But um, to your point, like I think first of all, like I've heard really, really good things about um Notion AI. We we use the plus plan at pricing SaaS. Um, but I've thought a bunch of times about upgrading to business just to use the um the AI functionality. And I I have a buddy who is at a successful like venture-funded startup and they use Notion AI constantly. He said, like, anytime one of their customer support reps like needs an answer, they go in and use Notion AI, and it's incredibly efficient. And it like kind of gets to this thing where it's like the more you're using a product, the more powerful um an AI layer probably is. Like, I thought that immediately when I saw this Slack launched an AI tool, and we can we can get to that um in our Slack episode. But um that's that's kind of the first piece for Notion. Well, one thing that is interesting to me around Notion that you kind of hit on hit on as well, is I think they do have a lot of upside for willingness to pay, at least in business and in the enterprise. We already mentioned calendar and mail, which people generally have kind of like lower willingness to pay for, but they're they're giving away AI meeting notes. So like there's an entire market of like granola, fireflies, like all these read AI, like they're all these companies that are doing just that and charging like 20 bucks a month. No shit's just giving it away. So like if you're using that and that's just bundled in for nothing, um, that they are likely going to raise prices soon, I would think, once they have more data on how people are are actually using their AI tools. Um, because I do I do think they have a big opportunity. But the big challenge for them with AI, and like this is where I got come back to with like using Notion AI. And it's so funny to me that they have like this uh testimonial from um OpenAI on their site. Like the question for me is like, do you use Notion AI and do all of these things within Notion? Or do you just use the LLMs, like use Claude or OpenAI to do all of these things that Notion is doing? So, like the the big value I think with Notion is that it's extensible, it integrates with everything, and you can kind of like get everything in one place and you have all this shared context, but so do the LLMs. And so, like, my inclination has been to just use OpenAI or use Claude and use connectors or MCPs or whatever with the products that we're using. And that's what's kind of held me back from going all in on Notion AI. Um, but clearly there's kind of like a frenemies vibe going on here. You already mentioned how much they're they're likely paying OpenAI and Athropic. Um, they're obviously you know shouting them out, but it's also kind of like an existential question for Notion of like, can we actually get people into our product or um are they gonna be using the LLNs?

SPEAKER_01 20:10

I think they're they're they're integrating like as much as they possibly can, which is like as a productivity platform that they kind of have to, right? Um and they have a separation between basic and premium integrations and there's like a paid version of that answer for it. So so I think that's fine. I think what they're then doing is it sounds like is that like they're tired, they're taking sort of all these sort of point solutions uh and just like either buying the best or building their own and just making it included in in this effort to uh to try and grow the user base even more. So I I I I haven't worked with Notion, but I would imagine that they have this kind of uh internal like strategy philosophy where it's like, hey, we we want to like overtake um like work, um, like white call work, and then 100 million users is just the beginning, we want to get to like 300 million or 400 million, five, whatever the number is, and sort of match Google workspace or uh or the office uh Microsoft Suite. And I think that's sort of the game they're playing. And I think in that sense, if you if you if you're if you're trying, so there's like a couple of strategies, where it's like, okay, so uh are they ever fully gonna do that? Maybe, maybe not. But if they keep pushing for every uh Notion user they acquire, they get 20 bucks, but Microsoft loses uh 150. Right? So and and I don't know how much Google loses, but but it's like okay, so so so there could be a strategy play where say, okay, so we'll just keep acquiring users for and we're gonna make ten or twenty bucks or something on it. But if Microsoft loses enough, at some point they're just gonna buy us. So so I think it's one of these where depending on what your strategy is, is I Either let's grow, land, and expand, and then either we're gonna be acquired because somebody doesn't like us anymore, and we're just gonna be the new Microsoft suite, or we now realize that nobody's gonna acquire us and that wasn't like what's what's gonna happen, and now we can raise prices because now we have the user base. And I think as long as I don't know if they're profitable actually. So but but but I think if they are, that's that is a very different scenario for if they're not profitable, right? So let's see how many they have a thousand employees and they do 600 million. So and they have we just learned they have like an 80% gross margin. I don't know, jury is out on whether they are they are profitable. Um they might be. Um they they might also not be, depending a little bit on on how that stack works. So so I think I think if they are profitable and if they're increasingly so profitable, and I think AI can have a big impact on that, and also sort of big consideration of how they're approaching AI strategy because that might suddenly pull them on profitable or or extend the deadline to which they didn't become profitable, whatever it is. There there might be um um that might change their sort of the strategic landscape they have in front of them with regards to pricing, where where this idea of just keep growing and become increasingly annoying to to sort of the people who are otherwise monetizing this space, right? And I just but if they if they just said hey, enough is enough, we want to make money, we're just gonna double prices. I think they would they would close to double revenue.

SPEAKER_00 23:40

Yeah. I did just do a quick chat GPT search, and it appears Notion is currently profitable. There aren't great numbers on it because they're private, but um it it seems that they are a profitable company. Um good for that.

SPEAKER_01 23:56

So I think that's especially if you're playing chicken with a market like this, I think that's like you you wanna you wanna own your own future. So so I think I would uh that means that they can keep growing like this and it'll get to whatever 150 million or 200 million users if they get that at one point they're gonna slow down, right? Yeah, um, and then I think at that point they're like, okay, either we we we expand, we monetize, or we or we uh or we try and and and do like an exit to one of the established ones. Um yeah, and there there are not that many companies say outside of private equity that would uh that would like from it from a non-financial buyer that would take them on, right? So there are a few. Um and if it's not Google or Microsoft, I don't know who it is. But um so but but yeah, then they might just raise prices. Um and I think I could probably get what's my what's my bet? I could probably get the revenue per user to something around 15 to 20. So I think tribbling wouldn't be out of the question for what they have here.

SPEAKER_00 25:02

Yeah, especially if they're if you're targeting the business and enterprise plans where I think there's way higher willingness to pay just because of the nature of B2B. Um, yeah, I I I love that.

SPEAKER_01 25:15

You can also just like squeeze your free. Yeah, that's true. I mean, so you just like if you have like 97% of users, like so 900, like think about it. You have 97 million people using for free.

SPEAKER_00 25:28

Yes.

SPEAKER_01 25:29

Okay, let's let's get that down to 94 million.

SPEAKER_00 25:33

Yes.

SPEAKER_01 25:34

Just that, right, is gonna add another um 300 million to your top line, right?

SPEAKER_00 25:39

Going to AI monetization, all right. So we talked about it briefly. They have kind of like two, and I think like this is increasingly gonna be the case. It's like baseline AI and then agentic AI, right? And like those, those are kind of two different things. And I think the way that Notion approaches this right now is like baseline AI is a feature, it's included, um, but it's a differentiator, right? It's it's what gets you from business from plus to business. As you can see, there's a trial of Notion AI in the free and plus plan, so people can check it out. But then in business, you actually get Notion AI, you get Enterprise Search, connects to all of your apps, you get AI meeting notes. I've actually tested this out and it's pretty great. And you get um Notion Agents. And this is where it gets really interesting because I do think they're actually monetizing the agents separately right now. There's a great post by Ryan New from Vendor, and they basically see under the hood of all of these SaaS companies because they're actually doing negotiations for their customers. So he said um within Notion, basically Notion, so AI isn't a $10 add-on anymore, it's included, and they're talking with clients about a fair pricing model for custom agents. AI isn't being given away, it's being priced in. Renewal quotes with uplifts far beyond historical norms, often double the pre-AI rates. That's interesting. No option to opt out, AI is forced into the package and rates won't be reduced if you don't want it. For what it's worth, negotiations are typically landing at $2 to $5 per user increase rather than the old $10 add-on. Um, so still no great insight into like exactly how much these agents are. Um but interesting to see kind of like how they're approaching it from a negotiation standpoint. Any thoughts on that?

SPEAKER_01 27:28

The first thing is that so if the math before it's correct and they have 100 million users and two to four percent of them are the paid users. Let's say they have three million paid users. What we're seeing here in the two to five dollar user range on the on the additional price is not covering the 60 million of cost we call we we talked about before, right? So just from like that math is it is one of these where it seems like they're still figuring out how to really price this, right? Yeah. So we just took on 60 million of cost and we're now repricing it to 15 million of new revenue. Okay, so that's not good, right? Might be any sort of step one and a multi-step plan and all this, that's fine. But but just just from the just just on that like pullback, like that's what we see here. So I think I think the idea of of of having an all-you-can eat uh AI for humans makes a ton of sense. Because especially with low price products like this, if you suddenly had like the credit system or usage volume or something that it would it would fundamentally change the business relationship that Notion has with its customer, which is you can use it for everything, it's dirt cheap, it does it all, and you just like you the purchase decision is super easy, right? Yeah. So now if we said, hey, it's gonna be like 20 bucks, and then you buy whatever you get, a thousand prompts, and then you have to pay whatever like a cent per prompt after that. Suddenly, a CFO that was currently paying, let's say like 100k for Notion for their company, wouldn't know if the next bill would be for 2 million. Like because he has no idea of controlling this. So I think for them to go on a licensed model, which means like they have a all-you-can eat sort of uh prepaid upfront fixed cost for the AI, is very much so in line with their approach so far. So I think that is like gobbling down on their like current strategy, which I think makes sense. And then lifting this agency AI out and saying, okay, we know that a human can press a button whatever two times a second, but we know that an agent can press a button a trillion times a second, and that's going to be like a way different cost scenario. So we need to treat these differently. I think also is right. But that now becomes a very like a different, like that is a it's much more sort of a specifically considered use case inside the organizations where that is paid for. And they say custom agents have like they have different sort of pricing considerations about that. So I think overall, if you take a step back from it, it looks like Notion is continuing there, like we have to deliver a lot of value for an like a low and like affordable and fixed price like strategy. And then on the other hand, with the agency stuff, it's like we need to cover costs. Yeah. So what they're not doing actually anywhere is pricing for value. Like that's sort of like we're just pulling back from that. We're we're like the strategy is different. We're pricing for market expansion, we're pricing for these other things, and the AI just has to be sort of dealt with as a cost item.

SPEAKER_00 30:49

That's so that's interesting you say that, or this reminded me of one of our recent office hours where you were talking about how value-based pricing can be really, really hard for horizontal products. And I think Notion is like the poster child for that argument. Like, like it is really, really hard to kind of figure out like there's no uniform amount of value that their customers are getting from Notion, right? Like you're gonna have power laws like everybody else. Um and so it's it's it's so hard, I think, for them to discriminate pricing and segment pricing um to really capture that.

SPEAKER_01 31:28

Exactly. So so so it's like, and so so for some companies you you you this this sort of idea that like with Notion, if you're if you are you're driving monetization in notion, just you kind of have to allow customers to get way more value than they pay. Like that almost comes with the territory of doing something like this. Like that's with Excel, right? Or like all other spreadsheet software is like some people is gonna use it for pretty much nothing. It just sits there, right? And other people are gonna make millions and millions of dollars by whatever, doing smart financial trading, whatever it is, right? And and so they're not gonna participate in that value when you sell something like that precisely because people can use it for anything and everything, right? But if you say, hey, my software does is a like allows you to design uh like microchip uh production blueprints, you have a very, very narrow like range of value because you know kind of what microchip blueprints are worth for people that need to design microchips. So you can get much closer to a fair share of the value because the value is very uniform, the same across different use cases, because the use cases are super, super similar, right? So yeah, so that's all the horizontal vertical that we're going for here. So I think with with that, I think they're just like they just get it that they're a horizontal solution. And it's like, okay, so we're horizontal in the like delivering work to people, and that can pretty much be anything, right? Um, and even like the free is probably not work, it's private stuff. So so I think they're they're just leaning into to what they are in that sense, and that that makes sense. So so what you have to do is just to make sure that you're that you're sort of on the forefront of that, you're not being commoditized too much, and that you do make a good margin of what you do, right? Yeah. So any kind of commoditized horizontal player like a telco company or electricity and utilities, open AI, as Sam Aldman said it himself, like he's just gonna be a markup on electricity, right? So basically it's so horizontal that we're just gonna deliver this to the market and the the core infrastructure cost, whatever, plus 30%, is our business model. And I think because you have like you have a little bit more with something like Notion, but but it's it's it's still that at its core to some extent. At least it's not full-scale value pricing in any kind of sense that you would get in more vertical ways.

SPEAKER_00 34:02

Right. Because like where I where my mind immediately went with the agents for Notion is like they could either do um, they could either like move towards outcomes, but there are like a billion different outcomes that you can do in Notion. So that seems like it would be really hard, uh, just beyond all of the initial challenges with outcome-based pricing. And then the other thing that I was thinking is um kind of what day AI is doing, where like they have different agents, or I think they call them like assistants that will do different things for you, and you pay a monthly license for those agents to do a certain amount of of work, right? And like that, I think would make more sense than outcomes for Notion, but I think they're too horizontal for even that to make sense. Like, I I think to your point, like that kind of like different differentiated agents is still more of like a vertical SaaS pricing play. Um, so yeah, I I like your analogy to uh open AI and being kind of like a markup on electricity. I think like that actually makes sense for Notion.

SPEAKER_01 35:02

Just like this idea that even with something like Notion that is so cheap, you have, I forget what's the what was the vendor guy's name again?

SPEAKER_00 35:09

Uh Ryan New.

SPEAKER_01 35:10

Yep. Ryan, yeah. Okay. So it's like just realizing that even for something like Notion, you still have enterprise level sales negotiations where you have negotiated prices. So it's one of these, but even Notion doesn't escape what I call commercial debt, meaning that different customers are gonna have different prices and different contracts and different agreements around everything. And I think one of the dangers that Notion should try and avoid is that, oh, we have this AI stuff, it costs us money. Um, so we're gonna give it to salespeople, and salespeople are sort of super opportunistic and they can see the vertical value in any specific customer case. So they might sort of go in for the kill and try to create a deal and all this thing. And then what's gonna happen is that they might on this very sort of clean, scalable model that they've created, create this sort of a stack of commercial debt with all these enterprise agreements where they've had their salespeople like try to go after different sort of verticalized value, like on the mission to cover the AI cost, is that they actually create this like renewal mess where every contract now is super negotiated, super complex, very, very different from any other contract, and just takes a lot of time to turn over every one, two, or three years, depending on the contract term length. So I think there is this, there is a risk that that Notion over the next two, three, four, five years is going to get to this point where they will keep growing. Their enterprise deals will keep growing in value, but they won't actually fall down to the bottom line because they will get this like large operational load of managing it from a billing perspective, from a CS perspective, from a technical debt perspective to make all that happen from an operations perspective, and then also from the account management perspective of keeping all these renewals going. So I think if I were the CRO of Notion, I would sort of say, hey, I would I would want to hold the line on some of these things, but keep pricing very scalable, even in the AI, and just like have that strategic decision that we're just gonna lose some money on this, but it's better than creating this mess uh internally from having all these kinds of vendor uh negotiations just to cover the AI cost. I think I'd rather just pay the one big bill to open AI and lose money there than extracting a little bit more from the market, but in this very messy way.

SPEAKER_00 37:34

That's a really interesting point. And yeah, that's a huge trade-off. It's just like how much, how many calories your team has to burn to deal with that commercial debt and renewal complexity.

SPEAKER_01 37:44

I should try the products for real for real. So on the pair, we're like gonna be the hundred million and first customers. It's about perfect time.

SPEAKER_00 37:52

Yeah, I love So, real quick, if you're doing the if you're doing like the uh equity analyst grade on notions pricing, um sell, hold, or buy. Where do you fall on on these guys?

SPEAKER_01 38:06

I would buy them at triple prices.

SPEAKER_00 38:08

Yeah, buying triple prices. So you like what they're doing, you would just raise prices.

SPEAKER_01 38:13

Yeah, so and I think so they know it too, right? So so I think yeah, they they are creating way more value. Uh and I think I think the ecosystem that they build is strong. Um, so they can be profitable if they weren't already whenever they want to. So they have a lot of strategic options ahead of them, which is uh which is really good. And I think I think so. They also, as I said, have a few pitfalls that they they need and want to aboard. Um, but uh, but it doesn't take away from the base case in that they have something really good going from them. And uh yeah, so it's it's uh I love it.

SPEAKER_00 38:45

And that's it today for Pricing Page Unpacked. If this was useful, subscribe to the podcast and join the discussion on Pricing SaaS, LinkedIn, or on YouTube. And remember, your pricing page isn't just a page, it's a strategy statement. We'll see you next week.