COMPASS Framework: Rethinking Pricing Metrics in the Age of AI with Steven Forth and Michael Mansard

Steven Forth has been a frequent guest on Impact Pricing and is a co-creator of the COMPASS framework. Michael Mansard is the Principal Director of Subscription Strategy at Zora. He's an investor in and mentor to several startups, and he started his career in consulting at companies like Deloitte and SAP, so he knows a lot.

In this episode, Steven and Michael dive deep into the COMPASS framework for evaluating pricing metrics in the age of AI and agentic systems, exploring how traditional SaaS economics are being turned upside down and why companies need to move away from user-based pricing models.

Why you have to check out today's podcast:

• Learn why AI pricing fundamentally breaks the traditional SaaS model of "expensive to build, cheap to run".
• Understand the COMPASS framework's 14-question assessment for selecting optimal pricing metrics.
• Explore the accelerating cycles of pricing complexity and simplification across technology waves.

"I think that most people are clueless and do not want to admit that they're clueless. And I think admission is key because admission leads you to a scientific approach to pricing and enables you to accept, to try smaller samples, especially in the age of AI."

– Michael Mansard

Topics Covered:

02:08 – How Michael got into pricing

03:12 – Defining business models vs. pricing models vs. pricing metrics

06:22 – Introduction to the COMPASS framework and why it exists

07:25 – How AI flips traditional SaaS economics on its head

08:03 – The gym membership paradox in AI pricing

11:05 – Steven's perspective on whether pricing fundamentals have changed

24:20 – Pricing evolution cycles and their accelerating speed

27:39 – How COMPASS captures competitive differentiation

34:28 – Michael's pricing advice on embracing iteration and admitting uncertainty

Key Takeaways:

"I've seen more change in my part of the technology world in the last six months than I've seen in my entire lifetime." – Steven Forth

"If you price it per user, the more a user uses it, the worse margin it would yield. And that's a problem, right? So I call that the gym membership paradox." – Michael Mansard

"We need to change the metric. Now the billion dollar question is what metric? And the raison d'être of that framework is exactly that. It's to help people navigate, hence the notion of COMPASS." – Michael Mansard

People / Resources Mentioned:

• COMPASS Framework: 14-question assessment for pricing metrics: https://www.linkedin.com/pulse/compass-agentic-ai-pricing-metric-framework-your-2-part-mansard-f9qqe
• Roger Martin Strategic Choice Cascade: Framework for aligning pricing with business strategy: https://rogermartin.medium.com/decoding-the-strategy-choice-cascade-475d40555eb1
• John Maeda's "The Laws of Simplicity": Design principles applicable to pricing models: https://lawsofsimplicity.com/
• Karan Sood: https://www.linkedin.com/in/soodkaran/
• PriceFX: Company introducing 125 agents: https://www.pricefx.com/ and https://lp.pricefx.com/agents_trial.html

Connect with Steven Forth:

• LinkedIn: https://www.linkedin.com/in/stevenforth/
• Email: steven@ibbaka.com

Connect with Michael Mansard:

• LinkedIn: https://www.linkedin.com/in/michaelmansard/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: mailto:mark@impactpricing.com