Version: 2.0 Date: 2026-02-18 Owner: BizOps Status: Accepted (Token Bank model approved) Product: Legionis Related: DR-2026-001 (Pricing Model Pivot), DR-2026-004 (Token Bank Pricing), pricing-usage-based-model.md, financial-plan.md, token-economics-byok-vs-managed.md
Legionis pricing must achieve three objectives simultaneously:
Strategic Intent: We are pricing a Product Operating System, not a chatbot or AI feature. Our pricing should reflect the value category of professional PM tools ($50-150/mo), not consumer AI tools ($10-20/mo).
| Decision | Choice | Rationale |
|---|---|---|
| Value metric | Operations (skill invocations, agent spawns, gateway sessions) | Aligns cost with value; heavy users pay more |
| Pricing model | Usage-capped tiers with overage billing | Predictable for users, manageable COGS risk |
| Launch price point | $39/mo Pro, $119/mo Pro Plus (Hybrid) | Balances accessibility with margin protection |
| Model gating | Tier-based (Haiku only for Free, +Sonnet for Pro, +Opus for Pro Plus) | Primary COGS control mechanism |
| Free tier strategy | 500 ops/month, Haiku only, 7-day context | Meaningful evaluation without COGS liability |
| Managed token billing | Prepaid Token Banks at 15% markup (DR-2026-004) | Replaces 30% metered model; better UX, eliminates credit risk, lower Stripe fees |
| BYOT positioning | BYOT is the hero path; Token Banks are the convenience on-ramp | "Bring your own keys for zero markup, or use our credits for instant setup" |
This strategy reconciles two existing pricing frameworks in the Legionis documentation:
As of DR-2026-004 (2026-02-18), managed token billing uses Prepaid Token Banks at 15% markup, replacing the previously proposed 30% metered model. BYOT (Bring Your Own Token/Keys) remains the hero path.
Token Bank Structure:
| Credit Pack | Price | Bonus | Effective Markup |
|---|---|---|---|
| $10 | $11.50 | None | 15% |
| $25 | $28.75 | None | 15% |
| $50 | $57.50 | $5 bonus credits | ~10% effective |
| $100 | $115.00 | $15 bonus credits | ~8% effective |
Key mechanics:
BYOT remains the hero:
The AI/PM tool market creates a pricing paradox: consumer AI tools have established a $10-20/mo anchor, while professional PM tools command $50-150+/mo. Legionis must navigate between these anchors.
| Product | Price | Value Metric | Limits |
|---|---|---|---|
| ChatGPT Plus | $20/mo | Unlimited chats | Soft cap (~50 msgs/3hrs for GPT-4) |
| Claude Pro | $20/mo | Usage-based | Soft cap on premium models |
| GitHub Copilot | $10/mo | Per seat | Unlimited suggestions |
| Cursor Pro | $20/mo | Per seat | 500 fast requests/mo |
Buyer psychology: "AI should cost ~$20/mo" -- this is the anchor we must overcome.
| Product | Price | Value Metric | Target |
|---|---|---|---|
| Productboard | $50-180/user/mo | Per seat | Mid-market to Enterprise |
| Aha! | $59-149/user/mo | Per seat | Strategy-focused teams |
| Jira Premium | $15-30/user/mo | Per seat | Execution-focused |
| Pendo | $15K-50K/yr flat | Platform fee | Product analytics |
Buyer psychology: "Professional PM tools cost $50-100+/mo" -- this is the anchor that justifies our pricing.
Legionis sits in the gap between these categories. We are not a chatbot with memory (ChatGPT). We are not a legacy roadmapping tool (Productboard). We are a Product Operating System -- a new category.
Price positioning: Above consumer AI ($20), below enterprise PM platforms ($60+), at the professional individual tool price point ($39-119).
Since we have no WTP data yet, here is the framework for validation:
Van Westendorp Price Sensitivity Meter (execute during POC):
Gabor-Granger Direct Questioning (execute during POC):
| Positioning Option | Implication | Price Range | Risk |
|---|---|---|---|
| "AI Assistant for PMs" | Competes with ChatGPT | $15-25/mo | Commoditized, race to bottom |
| "AI-Native PM Tool" | Competes with Productboard/Aha! | $50-100/mo | High friction, slow adoption |
| "Product Operating System" (chosen) | New category | $39-119/mo | Category creation risk, but defensible |
Decision: Position as "Product Operating System" -- this justifies pricing above consumer AI tools without requiring enterprise sales cycles. The category creation effort is the marketing cost; the pricing benefit is worth it.
An "operation" is defined as: a single skill invocation, agent spawn, or gateway session that consumes Claude API tokens.
Value metric evaluation criteria:
| Criterion | Operations | Seats | Projects | Context Storage | Features |
|---|---|---|---|---|---|
| Aligns with customer value | Strong -- more ops = more product work done | Moderate -- headcount != usage | Weak -- what's a "project"? | Weak -- storage != value | Moderate -- feature gates feel arbitrary |
| Aligns with our costs | Strong -- ops directly drive API COGS | None -- seats don't cause costs | None | Weak -- storage is cheap | None |
| Easy to understand | Moderate -- "operation" needs definition | Strong -- per user | Moderate | Weak | Strong |
| Predictable for buyer | Moderate -- monthly caps help | Strong | Strong | Moderate | Strong |
| Scales with value | Strong -- power users pay more | Moderate | Weak | Weak | Weak |
| Supports upgrade path | Strong -- hit cap, upgrade | Weak | Weak | Moderate | Strong |
Score: Operations win on 4 of 6 criteria, particularly on cost alignment and scaling with value.
The core insight: an operation is a unit of product work done.
/prd invocation = a PRD drafted (value: hours saved)@pm agent spawn = a PM colleague consulted (value: expertise accessed)@plt gateway = a leadership team meeting run (value: cross-functional alignment)| Dimension | Free | Pro | Pro Plus | Team (Future) | Enterprise (Future) |
|---|---|---|---|---|---|
| Price | $0/mo | $39/mo | $119/mo | $59/user/mo (min 5) | Custom ($15K+/yr) |
| Operations/mo | 500 | 5,000 | Unlimited* | Pooled (5,000/user) | Unlimited |
| Model Access | Haiku only | Haiku + Sonnet | Haiku + Sonnet + Opus | All models | All models |
| Context Retention | 7 days | 90 days | 1 year | 1 year | Unlimited |
| Storage | 50MB | 500MB | 5GB | 10GB shared | Unlimited |
| Support | Community | Email (48hr SLA) | Priority email + Slack | Priority email | Dedicated + SLA |
| Speed/Queue | Standard (shared) | Priority | Dedicated capacity | Priority | Dedicated |
| Opus Access | None | Limited (3/day) | Full | Full | Full |
*Fair use policy: 50K ops/month soft cap for Pro Plus
Target Persona: Individual PMs evaluating the product, hobbyists, open-source plugin users curious about the SaaS experience.
What They Get:
Pricing Rationale: Free tier is a pure acquisition cost. Philosophy: enable meaningful evaluation without creating COGS liability. The 500-op cap allows ~2-3 weeks of moderate daily use before hitting limits. Haiku-only gating is the primary COGS control.
COGS Estimate:
Target Persona: Individual PMs doing regular product work. "Strategic Sarah" -- the senior PM who needs this daily.
What They Get:
Pricing Rationale: $39 is the compromise position between PMM ($29, accessibility) and BizOps ($49, margin protection):
Target Persona: Product leaders managing multiple products, fractional CPOs, consultants serving multiple clients. "Scaling Steve" at an individual level.
What They Get:
Pricing Rationale: $119 maintains premium positioning:
Target Persona: Product teams of 5-15 PMs. "Scaling Steve" buying for his team.
Design Principles:
Target Persona: Enterprise product organizations with 50+ PMs. "Compliance Carol" -- the CPO.
Design Principles:
Free tier has a hard cap (no overages). Pro Plus is unlimited. Overages apply only to Pro tier.
| Overage Band | Rate | Example |
|---|---|---|
| 5,001 - 7,500 ops | $0.01/operation | 6,000 ops = $10 overage |
| 7,501 - 10,000 ops | $0.008/operation | 8,000 ops = $10 + $4 = $14 overage |
| 10,001+ ops | $0.006/operation | 12,000 ops = $10 + $20 + $12 = $42 overage |
Design Intent:
Model Cost Structure (populate with actual Anthropic API rates):
| Model | Cost per 1M Input Tokens | Cost per 1M Output Tokens | Typical Use Case |
|---|---|---|---|
| Haiku | [TBD: Your API rate] | [TBD: Your API rate] | Fast operations, simple queries |
| Sonnet | [TBD: Your API rate] | [TBD: Your API rate] | Standard operations, most skills |
| Opus | [TBD: Your API rate] | [TBD: Your API rate] | Complex analysis, strategic work |
| Operation Type | Avg Input Tokens | Avg Output Tokens | Typical Model | Blended Cost per Op |
|---|---|---|---|---|
| Simple skill (user story, context recall) | [TBD] | [TBD] | Haiku | [calculated] |
| Standard skill (PRD, decision record) | [TBD] | [TBD] | Haiku/Sonnet | [calculated] |
| Complex skill (business case, QBR deck) | [TBD] | [TBD] | Sonnet/Opus | [calculated] |
| Agent spawn (single @pm, @ci) | [TBD] | [TBD] | Sonnet | [calculated] |
| Gateway session (@plt, @product) | [TBD] | [TBD] | Sonnet/Opus | [calculated] |
Measurement Method: Run 100 operations of each type in production environment, log token counts, calculate averages. This MUST be done before launch pricing is finalized.
| Tier | Haiku % | Sonnet % | Opus % | Rationale |
|---|---|---|---|---|
| Free | 100% | 0% | 0% | Model gating enforced |
| Pro | 70% | 25% | 5% | Most users stick to simple/standard ops |
| Pro Plus | 40% | 40% | 20% | Power users doing strategic work |
Validation Method: Track actual model mix in first 90 days. If Pro tier Opus usage exceeds 5%, tighten daily Opus limit from 3 to 1 or remove entirely.
Tier COGS per User = (Avg Operations/User/Month) x (Blended Cost per Operation)Where:
Blended Cost per Operation =
(Model Mix % Haiku x Haiku Op Cost) +
(Model Mix % Sonnet x Sonnet Op Cost) +
(Model Mix % Opus x Opus Op Cost)
| Tier | Price | COGS Target | Gross Margin $ | Gross Margin % |
|---|---|---|---|---|
| Free | $0 | <$5 | -$5 (loss leader) | N/A |
| Pro | $39 | <$30 | >$9 | >23% (minimum) |
| Pro | $39 | <$25 (target) | >$14 | >36% (target) |
| Pro Plus | $119 | <$55 | >$64 | >54% |
| Pro Plus | $119 | <$45 (target) | >$74 | >62% (target) |
SaaS Benchmark: Healthy SaaS companies target 60-80% gross margins. At launch, we accept lower margins (23-36% for Pro) to prioritize accessibility, with a clear path to 60%+ via COGS optimization.
Goal: Minimize COGS by routing operations to the least expensive capable model.
Routing Rules (applied automatically):
Complexity Detection Triggers (auto-escalation):
If actual COGS exceeds targets, apply these levers in order:
| Priority | Lever | Action | COGS Impact | UX Impact |
|---|---|---|---|---|
| 1 | Tighten routing | Increase Haiku % by 10 points | -15% COGS | Minimal (slight quality difference on edge cases) |
| 2 | Prompt caching | Cache system prompts, agent personas, common context | -20-30% COGS | None (invisible to user) |
| 3 | Output length limiting | Cap responses at 2K tokens for most skills | -5-10% COGS | Minor (less verbose, potentially better) |
| 4 | Reduce Pro Opus access | Lower daily limit from 3 to 1, or remove | -5% COGS | Moderate (Pro users lose some premium access) |
| 5 | Lower Pro cap | 5,000 --> 3,500 operations | Proportional reduction | Moderate (forces earlier upgrade decisions) |
| 6 | Price increase | Raise Pro from $39 to $49 | +26% revenue per user | Risk: conversion rate decrease |
Recommendation: Start with levers 1-3 (routing, caching, output limiting) before restricting user access or raising prices. These improve margins without degrading the user experience.
Target: 5-10% conversion rate within 90 days of signup
Primary Conversion Mechanism: ROI Visibility
The built-in ROI tracking is the most powerful conversion tool. Every skill and agent invocation shows time saved:
Completed: PRD for authentication feature
Time saved: ~4 hours (vs. manual PRD writing + stakeholder reviews)Session total: 12.5 hours saved this month
Conversion prompt at cap or ROI threshold:
"This month you saved 12.5 hours using Product Org OS (500 operations).
Upgrade to Pro for 5,000 ops/month -- that's 100+ hours saved for $39/mo.
That's less than $0.40 per hour saved."
Secondary Conversion Mechanics:
Target: 15-20% of Pro users upgrade within 6 months
Primary Upgrade Trigger: Overage Accumulation
When Pro users consistently hit their 5,000 op cap, overages create a natural price comparison:
"Your overages this month: $52 (7,200 operations).
Pro Plus is $119/mo for unlimited operations.
At your usage level, Pro Plus saves you $[overage - $80 price difference]/month."
Secondary Upgrade Triggers:
The context moat is the primary retention mechanism. As users accumulate decisions, bets, assumptions, learnings, and feedback in their context registry, switching cost increases:
| Months of Use | Estimated Context Items | Switching Cost |
|---|---|---|
| 1 month | 10-20 decisions | Low -- easy to recreate |
| 3 months | 50-100 items | Moderate -- significant re-entry effort |
| 6 months | 150-300 items | High -- institutional knowledge locked in |
| 12 months | 300-600+ items | Very High -- irreplaceable organizational memory |
Retention tactics by lifecycle stage:
User invokes skill/agent
--> ROI displayed ("~4 hrs saved")
--> Session total accumulates
--> Weekly email: "You saved 15 hours this month"
--> Monthly: "You've saved 45 hours in 3 months"
--> At cap: "Upgrade to save even more"
--> After upgrade: "Since upgrading, you've saved 120 hours ($4,680 value at $39/hr PM rate)"
This creates a self-reinforcing conversion loop: the more the user engages, the more value they see, the stronger the upgrade signal.
Philosophy: Maximize TAM, compete on price, grow fast
| Tier | Price | Pros | Cons |
|---|---|---|---|
| Pro | $29/mo | Competitive with consumer AI tools; lower barrier to conversion; larger addressable market | Zero margin cushion if COGS = $30; forces aggressive COGS optimization; hard to increase later (price anchoring) |
| Pro Plus | $99/mo | Psychological "$99" tier; 3.4x Pro pricing | May not cover unlimited operations COGS; thin margin on heavy Opus users |
Financial Implications Framework:
If 1,000 Pro users, COGS = $28/user:
Revenue = $29,000/mo
COGS = $28,000/mo
Gross Profit = $1,000/mo (3.4% margin)If COGS climbs to $31/user (10% overage):
Revenue = $29,000/mo
COGS = $31,000/mo
Gross Profit = -$2,000/mo (LOSS)
This option works if:
Philosophy: Protect margins, position as premium, grow sustainably
| Tier | Price | Pros | Cons |
|---|---|---|---|
| Pro | $49/mo | $19 margin cushion if COGS = $30; room for usage growth; sustainable unit economics | Higher barrier to conversion; positions as premium vs. ChatGPT Plus; may limit TAM in price-sensitive segment |
| Pro Plus | $129/mo | Clear premium positioning; high margin; can absorb heavy usage | $80 gap from Pro may feel steep; requires strong differentiation messaging |
Financial Implications Framework:
If 1,000 Pro users, COGS = $30/user:
Revenue = $49,000/mo
COGS = $30,000/mo
Gross Profit = $19,000/mo (38.8% margin)If COGS climbs to $35/user (17% overage):
Revenue = $49,000/mo
COGS = $35,000/mo
Gross Profit = $14,000/mo (28.6% margin -- still viable)
This option works if:
Philosophy: Balance accessibility with margin protection. Data-driven adjustment post-launch.
| Tier | Price | Pros | Cons |
|---|---|---|---|
| Pro | $39/mo | More accessible than $49, less risky than $29; $9 margin cushion at $30 COGS; competitive with professional tools; under $40 psychological threshold | Thin margin if COGS optimization fails; lower revenue per user than $49 |
| Pro Plus | $119/mo | 3x Pro pricing (clear value gap); high margin even with heavy Opus usage; "just under $120" threshold | $80 gap from Pro may feel large (but unlimited ops + full Opus justifies it) |
Financial Implications Framework:
If 1,000 Pro users, COGS = $25/user (target):
Revenue = $39,000/mo
COGS = $25,000/mo
Gross Profit = $14,000/mo (35.9% margin)If COGS = $30/user (worst case before increase):
Revenue = $39,000/mo
COGS = $30,000/mo
Gross Profit = $9,000/mo (23.1% margin -- thin but viable)
If COGS = $20/user (post-optimization):
Revenue = $39,000/mo
COGS = $20,000/mo
Gross Profit = $19,000/mo (48.7% margin -- healthy)
Why Hybrid is Recommended:
| Metric | Option A ($29/$99) | Option B ($49/$129) | Option C ($39/$119) |
|---|---|---|---|
| Pro Margin at $25 COGS | 13.8% | 49.0% | 35.9% |
| Pro Margin at $30 COGS | -3.4% (LOSS) | 38.8% | 23.1% |
| Conversion Risk | Low (cheap) | High (expensive) | Medium |
| Margin Risk | HIGH | Low | Medium |
| Price Increase Path | Very hard | Easy | Moderate |
| Price Decrease Path | N/A (already low) | Easy | Easy |
| Flexibility | Low | Medium | HIGH |
Recommendation: Launch at Option C ($39/$119). Gather 90 days of COGS data and conversion data. Adjust based on evidence, not assumption.
Pricing Model: Per-seat + shared context pool
| Element | Design |
|---|---|
| Base price | $59/user/month (minimum 5 seats) |
| Operations | Pooled: 5,000 ops/user/month shared across team (25,000 pool for 5-seat team) |
| Model access | All models (Haiku, Sonnet, Opus) |
| Context | Shared workspace -- all team members see decisions, bets, feedback |
| Admin | Invite/remove users, usage analytics per user |
| Portfolio | Cross-product views, multi-product context filtering |
Volume Discounts:
Pricing Model: Annual contract value (ACV) based
| Element | Design |
|---|---|
| Starting ACV | $15,000/year (10-seat minimum) |
| Operations | Unlimited (no caps, no fair use) |
| Model access | All models + priority routing |
| Context | Unlimited storage, unlimited retention |
| Security | SSO (SAML, Okta, Azure AD), RBAC, audit logs |
| Support | Dedicated CSM, <4hr SLA, implementation support |
| Deployment | Shared instance (standard), dedicated instance (premium) |
ACV Frameworks by Company Size:
Grandfathering Policy: Existing users maintain their price for 12 months after any increase. After 12 months, prices adjust to current rates.
Increase Triggers:
Phase 1 (Launch): Single global price in USD. Simple, no complexity.
Phase 2 (M6-12): Consider purchasing power parity (PPP) for key markets:
| Decision | Options | Deadline | Owner | Dependencies |
|---|---|---|---|---|
| Final Pro price | $29, $39, or $49 | POC exit (Week 6) | BizOps + PLT | WTP data from POC users |
| Final Pro Plus price | $99, $119, or $129 | POC exit (Week 6) | BizOps + PLT | Pro price decision |
| Free tier operations cap | 300, 500, or 750 | Phase 1 start | PM + BizOps | COGS per Free user data |
| Pro tier operations cap | 3,000, 5,000, or 7,500 | Phase 1 start | PM + BizOps | COGS per Pro user data |
| Overage billing: hard cap vs overages | Hard cap or tiered overages | Phase 1 start | PM + BizOps | Engineering feasibility |
| Annual discount | 15%, 20%, or 25% | Phase 1 start | BizOps | Churn projections |
| Launch promotion | None, 30% off first 3mo, or 14-day free trial | Launch day | PMM + BizOps | Conversion rate targets |
Test 1: Price Point (POC Period)
Track daily during first 90 days:
| Metric | Target | Red Flag | Action if Red Flag |
|---|---|---|---|
| Pro COGS/user | <$25 | >$30 | Tighten model routing (Lever 1) |
| Model mix (Pro) | 70/25/5 H/S/O | Opus >10% | Reduce daily Opus limit |
| Avg ops/Pro user | 2,000-3,500 | >4,000 | Monitor; may need to lower cap |
| Free-to-Pro conversion | 5-10% | <3% | A/B test upgrade messaging and Free tier limits |
| Pro-to-Pro Plus conversion | 15% (6mo) | <5% (3mo) | Lower Pro Plus price or add value |
| Monthly churn (Pro) | <5% | >7% | Investigate: onboarding? value? competitor? |
| Free user COGS | <$5/user | >$8/user | Lower Free cap from 500 to 300 |
| Overage revenue/Pro user | $5-10 | <$1 | Users not hitting cap; may lower cap to drive upgrade |
| Trigger | Condition | Action | Timeline |
|---|---|---|---|
| COGS too high | Pro COGS >$30 for 2 consecutive months | Raise Pro to $49 OR tighten routing | Implement within 30 days |
| COGS comfortable | Pro COGS <$20 for 3 consecutive months | Consider lowering to $29 (market expansion) | Evaluate at quarterly review |
| Conversion too low | Free-to-Pro <3% for 90 days | Lower Free cap OR add Pro trial OR lower price | A/B test within 2 weeks |
| Conversion very high | Free-to-Pro >15% for 60 days | Consider raising price (headroom exists) | Evaluate at quarterly review |
| Pro Plus underperforming | Pro Plus adoption <10% after 6 months | Lower from $119 to $99 | Implement at next billing cycle |
| Pro Plus overperforming | Pro Plus adoption >30% after 6 months | Consider raising to $149 | Evaluate at quarterly review |
| Churn crisis | Pro churn >8% for 2 consecutive months | Investigate root cause; consider annual discount or feature investment | Emergency response within 1 week |
Framework 1: Blended COGS per Operation
Input:
- Haiku cost per op: $[TBD]
- Sonnet cost per op: $[TBD]
- Opus cost per op: $[TBD]
- Model mix (H/S/O): [70/25/5] for Pro, [40/40/20] for Pro Plus
Output:
Pro Blended Cost = (0.70 x Haiku) + (0.25 x Sonnet) + (0.05 x Opus)
Pro Plus Blended Cost = (0.40 x Haiku) + (0.40 x Sonnet) + (0.20 x Opus)
Framework 2: Monthly COGS per User
Input:
- Avg operations/user/month: [TBD]
- Blended cost per op: $[calculated above]
Output:
Monthly COGS = Avg Ops x Blended Cost
Framework 3: Margin Sensitivity
At $39 Pro price:
- COGS $15/user --> 61.5% margin (excellent)
- COGS $20/user --> 48.7% margin (good)
- COGS $25/user --> 35.9% margin (acceptable)
- COGS $30/user --> 23.1% margin (minimum viable)
- COGS $35/user --> 10.3% margin (REQUIRES ACTION)
- COGS $40/user --> -2.6% margin (LOSS - raise price or cut costs)
| Product | Free Tier | Individual | Team | Enterprise | Value Metric |
|---|---|---|---|---|---|
| Legionis | $0 (500 ops) | $39-119/mo | $59/user/mo | $15K+/yr | Operations |
| ChatGPT Plus | Free tier | $20/mo | $25-30/user/mo | Custom | Messages |
| Claude Pro | Free tier | $20/mo | $30/user/mo | Custom | Usage-based |
| GitHub Copilot | Free tier | $10/mo | $19/user/mo | $39/user/mo | Per seat |
| Cursor Pro | Free tier | $20/mo | N/A | Custom | Fast requests |
| Notion AI | Free tier | $10/mo | $15/user/mo | Custom | Per seat |
| Productboard | Trial | $25+/user/mo | $60+/user/mo | Custom | Per seat |
| Aha! | Trial | $59/user/mo | $79+/user/mo | Custom | Per seat |
| Confluence | Free (10 users) | $6/user/mo | $11/user/mo | Custom | Per seat |
| Linear | Free tier | $8/user/mo | $16/user/mo | Custom | Per seat |
Positioning Insight: At $39/mo, we are:
Layout: 3-column comparison (Free | Pro | Pro Plus), with Team and Enterprise as separate section below.
Key Elements per Tier Card:
Psychological Pricing Tactics:
Assumptions: 70% Free, 25% Pro, 5% Pro Plus
| Scenario | Free Users | Pro Users | Pro Plus Users | Monthly Revenue | Annual Revenue |
|---|---|---|---|---|---|
| Option A ($29/$99) | 7,000 | 2,500 | 500 | $122,000 | $1,464,000 |
| Option B ($49/$129) | 7,000 | 2,500 | 500 | $187,000 | $2,244,000 |
| Option C ($39/$119) | 7,000 | 2,500 | 500 | $157,000 | $1,884,000 |
Revenue Delta: Option C generates $420K more ARR than Option A, and $360K less than Option B. The $420K additional revenue over Option A is worth the marginal conversion risk.
| Term | Definition |
|---|---|
| Operation | Single skill invocation, agent spawn, or gateway session that consumes Claude API tokens |
| COGS | Cost of Goods Sold -- primarily API costs for model inference |
| Blended Cost | Weighted average cost across multiple models (Haiku, Sonnet, Opus) |
| Fair Use | Policy preventing abuse of "unlimited" tier, enforced via soft caps |
| Model Gating | Restricting model access by tier (Haiku-only for Free, etc.) |
| Intelligent Routing | Automatic model selection based on operation complexity |
| Overage | Usage exceeding tier allocation, billed per-operation (Pro tier only) |
| Context Retention | Duration that decisions, bets, and learnings remain in the registry |
| Value Metric | The unit by which pricing is measured (operations, seats, storage, etc.) |
| WTP | Willingness to Pay -- the price range customers accept for a product |
| PPP | Purchasing Power Parity -- adjusting prices for local economic conditions |
| ACV | Annual Contract Value -- total annual revenue from an enterprise contract |
Version: 2.0 Last Updated: 2026-02-18 Owner: BizOps Next Review: After POC completion (Week 6) -- pricing decisions finalized Distribution: Product Leadership Team, BizOps, PMM
Related Documents:
pricing-usage-based-model.md -- Operational pricing model (superseded by this strategy)financial-plan.md -- Unit economics and financial projectionsstrategic-plan.md -- Product strategy and phased roadmapgtm-strategy.md -- Go-to-market strategytoken-economics-byok-vs-managed.md -- BYOK vs managed billing analysis (v2.0)decisions/DR-2026-004-token-bank-pricing.md -- Token Bank pricing decision recordEnd of Document