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By Agent AI 26 Sep 2017

Why is Zendesk so expensive?

Companies like Zendesk rely on per-seat license models, where each user is given a ‘seat’ and the customer pays a monthly fee for the number of users. In general, per-seat licensing has been a great way for SaaS companies to charge a subscription and collect reliable revenue. It’s helped companies like Zendesk grow into large, successful organizations. But there’s also no question that this success and pricing model comes at a cost, because pricing is not tied directly to how much a customer uses a service.

In short, it makes services like Zendesk more and more expensive for smaller companies who have low-to-medium levels of usage.

At Agent.ai, we think the solution is to move to usage-based pricing: you only pay for what you use.

Seat-based subscription models have lots of problems but have been “good enough” for a long time. But as Companies like Zendesk leverage more AI, it will make less and less sense to charge per seat, and more sense to charge for what is actually being used to get work done: the compute power needed to run increasingly intelligent and useful AI services.

For products in which AI can provide value, such as in customer support or CRM, the AI itself should actively reduce human work over time. What does this mean in practice? In the customer service sphere, for example, bots will work alongside humans, so humans will operate with greater productivity. But when Zendesk integrates AI while continuing to charge on a per-seat basis they are actually dis-incentivized from making sure that AI works really well and makes users more efficient. Think about it: companies will lose revenue as they increase AI helpfulness, because each person (each seat they sell) will be able to do more, and fewer people will be needed to do the same job. So this pushes them to drag their heels on innovation.

On top of all of that, it gets pretty darn expensive to do the research for developing good AI and to run the system 24/7. Compute power can easily take a solid chunk of revenue. So Zendesk starts selling fewer seats while their system becomes more expensive to develop and run.

Usage-based pricing — like what we offer at Agent.ai — opens the door to a more granular experience in which the customer only pays for what they use. Using Zendesk is the equivalent to buying a ticket to a single football game, versus being forced to buy a season pass, even if you can only make it to that one game. But usage-based models also have other positive byproducts. This also takes away the desire for customers to share accounts and have a worse experience.

Try our usage-based platform today. You only pay when the AI actually resolves tickets and makes your organization more efficient.