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Per-seat pricing was thoughtless revenue
Microsoft's new tier
Microsoft is shifting its enterprise plan with an E7 tier at $100 per user per month that includes some usage, with charges for usage on top. The old appeal was simplicity: Microsoft does everything a business needs, no component is necessarily the best, but they all mostly work together for one price.
Why seats felt free
When a company hired someone, the $50 or $100 monthly license was part of that employee's loaded cost. It worked a lot like CapEx: the decision was made up front and nobody thought about it again. Usage billing means looking at the Microsoft bill every month and asking what the company is paying for and how good each product is. Most companies set budgets once a year, so a monthly spending decision doesn't compute for them.
The heavy-user problem
Microsoft had a reason. The heaviest users burn through tokens and cost the company far more than $100 a month. Microsoft wants to keep the set price for the vast majority of employees and ask customers to think a little about the extreme ones, without making them think so much that it breaks the model.
Why do companies budget software once a year?
Finance teams plan headcount and fixed costs on an annual cycle, and a flat per-person license fits neatly into that plan. Usage-based bills vary month to month, so they are harder to forecast and approve. Cloud computing's variable bills led to a discipline called FinOps, which the FinOps Foundation, part of the Linux Foundation, now promotes.
Why do heavy AI users cost so much more?
AI models are billed and run in tokens, which are small chunks of text. A long task with many steps uses far more tokens than a short question. Reasoning models also generate many internal tokens before they write an answer, which raises the compute spent on each hard problem.
How did per-seat pricing become standard?
Older enterprise software was often priced by the processor or the size of a machine. When desktop software arrived, vendors licensed it per computer or per user. Salesforce launched in 1999 with a monthly subscription charged per user, and many software-as-a-service companies followed.
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