AI hasn’t just changed what software does — it’s changed how vendors charge for it. For midmarket CIOs, the rules of the game have shifted, and the old procurement playbook no longer applies.

There’s a major repricing happening across the enterprise software market, and it doesn’t announce itself loudly. It shows up as a renewal conversation where the vendor introduces new “usage tiers,” or an end-of-quarter invoice that runs 20% above the forecast. It shows up in a CFO asking why the IT budget is harder to pin down than it used to be.

The underlying cause is straightforward: AI capabilities are now baked into every major SaaS platform, and AI doesn’t run on users — it runs on compute. Vendors are repricing to reflect that reality. The question for midmarket technology leaders isn’t whether this shift is happening, but whether your organization is positioned to manage it on your own terms.

From fixed costs to variable ones

For most of the past decade, enterprise software had the financial profile of a utility on a fixed plan: predictable, forecastable, negotiable at renewal. Seat-based pricing rewarded scale and punished waste, but it was legible. Finance could model it. Procurement could benchmark it.

Consumption-based and hybrid models change that profile fundamentally. Cost is no longer a function of headcount — it’s a function of activity, including AI-assisted tasks running in the background that no one explicitly set in motion. One analysis put average monthly budget variance at 38% for consumption-priced software, compared to roughly 4% for seat-based contracts. That’s not a rounding error in a budget cycle — that’s a reforecast conversation with your CFO.

The vendor pitch — that billing by activity gives buyers more control — is appealing in theory. In practice, organizations that have made the switch are paying an average of 22% more than under their prior models, not less. Part of that reflects genuine AI value delivered. Part of it reflects a structural reality: when every action carries a charge, heavy users and background processes accumulate costs that a seat-based model would have absorbed at a flat rate.

The pattern across buyers who use these tools: those who negotiate on per-unit rates rather than total contract value, and who put credible alternatives on the table, consistently land materially below a vendor’s opening position on consumption-based contracts. The gap between good and median outcomes isn’t negotiating skill — it’s preparation and data.

Where leverage actually lives right now

Not every vendor negotiation has the same dynamics. Categories with multiple credible competitors — identity and access management, cloud security, CRM, application performance monitoring — give buyers real options, and vendors respond to that pressure. Categories with high switching costs or regulatory dependencies, like compliance tooling and legacy network security, shift power back to the vendor regardless of how prepared the buyer is.

One structural change worth watching: the economics of building internal software alternatives have shifted. AI-assisted development has lowered the cost and time to build internal tools — task automation, reporting layers, knowledge repositories — that would previously have required a SaaS purchase. When a buyer can credibly show they’re evaluating that path, it introduces a pressure that incumbents take seriously. In the right categories, it’s become a real lever rather than a theoretical one.

What this means for how you run IT procurement

The operational implication isn’t that consumption-based pricing is inherently bad — it’s that it requires a different management posture than fixed-seat contracts did. Three practices matter most:

• Understand your cost per action before you sign. What tasks will each tool perform, how often, and what does each one cost in billable units? That foundational picture is what makes forecasting and negotiation tractable.
• Monitor usage continuously, not just at renewal. Tools get adopted laterally, use cases expand, and by the time the renewal arrives the organization is locked into a much higher tier than the original scope ever anticipated.
• Treat procurement intelligence as a standing investment. Benchmarking data, renewal calendars, and category-specific playbooks are the table stakes for negotiating models that vendors have had years to optimize in their favor.

Midmarket organizations have always sat at a slight disadvantage in software procurement — large enough that the dollar amounts are meaningful, but without the scale of an enterprise buyer. Variable pricing can widen that gap. So can the tools now available to close it. The difference increasingly comes down to whether your procurement function has kept pace with the strategies vendors have been refining for years.

Data points referenced in this piece draw from Vertice’s consumption-based pricing research and the Vendr (a Vertice company) 2025-2026 Pricing Intelligence Report. Figures are illustrative of broader market trends and will vary by organization, vendor, and deal context.

Diego Rosenfeld

Diego leads RSM's technology advisory practice, focused on helping organizations build actionable IT roadmaps and navigate business transformation. Working across a broad range of industries, he brings both strategic perspective and hands-on experience to each engagement, frequently serving clients as a fractional or interim CIO. Much of Diego's current client work centers on generative AI. He has developed a considered point of view on the subject: the organizations best positioned to benefit are those that approach adoption responsibly, thoughtfully sequencing initiatives across productivity improvement and process automation rather than pursuing speed at the expense of sound judgment. He works closely with leadership teams to develop AI strategies that are practical, governed, and built to last. Diego is a strong proponent of OKR driven IT execution, applying structured objective-setting to align technology initiatives with broader business priorities. He pairs this with a focus on IT financial transparency, helping clients identify cost optimization opportunities and determine whether their technology investments are delivering measurable value. Diego enjoys writing about emerging technology and is a regular speaker at webinars and live events, connecting the dots between strategy and real-world application. Outside of work, Diego is an avid tennis and padel player, and competes on the American Backgammon Tour.

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