What is seat-based pricing and what are its disadvantages?

Seat-based pricing is a pricing model where the cost of a product or service depends on the number of users (seats) who have access to the system.

For example, if a company has 10 employees and the price per user is $10, then the total cost will be $100.

Cons of seat-based pricing:

• Not flexible for different teams: companies with different numbers of users pay proportionally, which can be expensive for larger teams.
• Scaling difficulties: as the number of users grows, the cost increases linearly, which may deter customers.
• Does not account for actual usage: if some users rarely or never use the product, you still have to pay for them.
• May encourage system circumvention: customers might create shared accounts or find ways to reduce the number of users, which decreases revenue.

This model is suitable for products where it is important to pay specifically for the number of active users, but it requires careful pricing and communication with clients.