Pricing Page unPacked - LOVABLE: Two $50 plans, and what a credit actually buys

Rob Litterst (0:10)

Welcome to Pricing Page unPacked. I'm Rob Litterst, and I'm joined by Ulrik Lehrskov-Schmidt, pricing expert and CEO of Willingness To Pay. Each week we take a real company's pricing page and break it down. The decisions behind it, the trade-offs, and what it tells us about how that company actually wants to grow. No slides, no scripts, just a real conversation between two friends who live and breathe pricing. Ulrik, you ready?

Ulrik Lehrskov-Schmidt (0:10)

I'm ready.

Rob Litterst (0:10)

Lovable.

Ulrik Lehrskov-Schmidt (0:45)

Yeah, today we're talking about Lovable. So I can say that from my part of the world, I'm in Denmark and Lovable is Swedish. So we're it's like you know, neighbor state almost. So there's a lot of you know hype around it. One of the first VC funds that I started working with in Denmark is also like an early investor in Lovable. And so there is there's just like you know a little bit like go tigers, like home team sort of around Lovable in Scandinavia.

And then as I was saying to you, they feel like everybody just started like the vibe coding space. They got a little bit, I think, early to it, and then they got you know taken over by I think Cursor and Replit, like some of these just like made inroads on the more sort of friendly like B2B route, where Lovable seems to be still all almost like B2C in a way. Like they are they have a more you know lighter feel, sort of less techy in a way than some of the others.

But I'm totally unbiased because I haven't used either of the tools. I'm only personally just in Claude. So only look at the pricing, but this is gonna be a lot of fun.

Rob Litterst (2:06)

Lovable is doing over 500 million in annual revenue with 146 employees, which comes out to roughly 2.8 million in ARR per head. And it sells credits, not seats, at their entry tier. And their credit model has become very popular. I think a lot of people look to Lovable as kind of like a pricing reference. Ulrik, before we get into the company history, into kind of like what the pricing strategy and structure looks like now, what do you see immediately when you look at the Lovable pricing page?

First impressions: two $50 plans, rollovers and add-ons

Ulrik Lehrskov-Schmidt (2:39)

Three plans. It's so right there that you kind of sometimes miss it, like because everybody has three plans. So it's like, yeah, that's how you do pricing. It's like, not necessarily, right? You're gonna have four, you're gonna have one, like you get to choose, but they have three plans. Then I'm noticing sort of a few other things. One is that it's almost like they deliberately made it tricky where both the pro and the business plan are $50 a month. So it's like, okay, so usually you'd have some sort of like, you know, good, better best, so small, medium, large, where it's like where the pricing on plans would like increase from left to right, but now the first two just have the same price.

So it's like, oh. So usually that means that either people are working with some sort of weird decoy mechanism that like they're deliberately putting like a worse option in so that you'll choose the other one. It's actually because they have what I call a multi-pool credit system. So if you go down, like one of them is like pro credits, and then the next one is like business credits. So, okay, so we're like it's not just credits, it's like we have different kinds of credits.

And then of course, the devil is in the detail of what happens here. Then another thing, like two other things that I'm noticing. One is that even their pro plan, which is like the smallest plan, has credit rollovers, and then there's a little information mark there. Yeah, so one month from monthly plans or until one month after the end of your annual plan. This is interesting. So credit rollovers are a fantastically powerful tool to drive conversion. One of the things that happens in any kind of pricing is that people sort of consider buying and then they're like, okay, what if I mess up?

So if I buy something and I regret it, then I'm gonna feel stupid. So maybe I should just wait and like think twice. So people hesitate in the sort of the moment of purchase. What rollovers do is that they kind of let you off the hook. So it's like, okay, so if I buy this and I don't use it, I get another chance. So then like my opportunity for regret is like vastly diminished. So people then just like take the plunge, they buy, and then off you go, right?

So the whole thing has to do with like, okay, but then if you roll over, then also like what's next? Like, what if people don't use it? Then you have to sort of carry this in your balance sheet and so forth. So you have this sort of tug of war between should you roll over, should you not roll over. One thing is like it's good for conversion, but maybe it's not good for renewal, or and so forth. So, what they're doing here is they're rolling over monthly once.

So I would say they have rollovers, but they've kind of chosen the least generous version they could. So monthly is rollover once. I would usually say that monthly doesn't cost you that much more, and the increased conversion is going to be better if you let it roll over twice. You're also gonna get some friction in people that you know where the credits expire and so forth. So twice rollover monthly is sort of my usual one. And then the thing here is that they've actually cleverly used it to say, hey, annual plans they roll over as well, but only one month.

So if I buy something in January, like January 1st, then I spend all the credits during the year, and then whatever I have left off does roll over into the next year. But as I read this, it then expires already 30 days into the next year. Yeah. So it isn't actually like the real mathematical difference between like no rollovers and rollovers for the annual plans, it's almost nothing, but they get to say it. And then the second thing I noticed was that they have add-ons available for enterprise.

So they kind of structure the packaging in a way where we have like pro business enterprise, and then enterprise like opens up like a menu of other things that I can now buy. So here we have security, support, expert services, bunch of other stuff. Access to an FDE, which is interesting. Which sounds like if you only get access to it from the last tier, why not just create a fourth tier? Yeah. Right? So it almost feels like they kind of want it just to have the one, two, three tier at the top, and then everything else would but sort of be too complicated, so they kind of buried it beneath there, and like people are gonna find it, so that that that's maybe okay.

But it's just a communication choice for how to do it, and also they kind of split it out so you can have support and billing or security and IT or expert services, all three, like and so you can sort of it's a little bit like a feature toggle for like larger customers.

Rob Litterst (7:12)

This is interesting to me. And I want to get into this because I think this is kind of like I think the enterprise add-ons are kind of like their second layer of like I think that's like their SLG layer, right? Like they they've recently hired a ton of salespeople. I actually know that their CRO Ryan Meadows just left. But he was a HubSpot guy. He's great. He led sales at Klaviyo for a few years, is a super sharp guy, and he hired a ton of like old HubSpot sales leaders, and they have this great org now that I would imagine their main job is selling kind of like these enterprise add-ons to try to get teams on Lovable.

Background: who is Lovable?

Rob Litterst

Before we get into that, just some quick background on the company. So Lovable, it's kind of crazy. They were founded in 2023, so they're only a few years old. Their CEO, Anton Osika, is kind of like a big follow on LinkedIn. I know a lot of people follow him on LinkedIn and X, and I think people really admire him. They have scaled incredibly fast and have kept their headcount remarkably low for the amount of revenue that they're doing, as we covered earlier.

I think they're doing 2.8 million per head, which is just crazy. They are kind of like one of the first companies that like really coined vibe coding. I think like last week we talked about Clay and how they kind of coined the GTM engineer. Lovable is kind of like one of the first companies you think of when you think about vibe coding. The product surface has widened fast. They have an app builder, they have Lovable Cloud, which is a Supabase-native backend that we've used at PricingSaaS, publishing, custom domains, GitHub two-way sync, security and governance.

And as far as scale, they have, I think, eight million users at the time that we did this digging, over 60 million projects hosted and over 200,000 projects created or updated per day. So that like that there's this concept of like being in the token path, right? So, like if you're in the token path and you're kind of like where people are using tokens, and Lovable is certainly that. And I think they are one of those apps that have just been able to grow insanely fast because they allow people to build things.

And I think we've talked about this before, but one concept that I think is just super powerful about Lovable, about Claude Code, cowork, like all these AI apps, there's this kind of stratification and willingness to pay right now, I feel like in SaaS products. And for like horizontal apps that solve a bunch of different use cases, but don't do any of them like really, really well, or they might just do them okay. I think willingness to pay has fallen quite a bit.

And I think like they're seeing a lot of pricing pressure. For these products that are essential for building in the age of AI, I think willingness to pay, as we've seen, the growth rate of Lovable, Claude Code, everything like that, has just gone ballistic. And so like these companies can grow insanely fast. And like one thing that that we can talk about is how Lovable handles top-ups. But like when John was building our website, we've since moved off of Lovable, but we used to use Lovable.

And as he was building, like he would get hit, he would hit our credit limits and he would get hit with these notifications to top up. And he would do it every single time. Like they must just get a ton of revenue from people topping up mid-project because they don't want to stop doing what they're doing. So they have that dynamic working for them.

Ulrik Lehrskov-Schmidt (10:30)

It's unlimited users. You so you have you, whatever you are, if you're a company or an individual, you get access. And then the is it's so upfront that this is going to be consumption based and on credits. Like it's not something that they're trying to sort of sneak into the backdoor, it's just like, yeah, this is how this works. They actually have a pretty good feature differentiation, I would say, where you know the different plans have different features. It's and these are actual sort of functional features where you know that that matter.

And that's where you are. And then I would say that the actual like initial dollar amount, like 50 bucks, when have you seen an enterprise that was like 680 bucks a month? Like it doesn't like that price point itself doesn't sort of scream enterprise and also just a month. Like when have you been able to sort of buy anything at an enterprise for on a monthly plan? So right, so it's one of these where the actual money is not gonna be at the sort of the plan level, they're gonna be at the credit volume level on top of the plans, right?

So this is just the baseline. So you kind of know it's a little bit like when you go to Disneyland, you know you're not gonna get away with all your money. Like you walk in, okay, yeah, I pick the ticket, I'm here. And you know that before the end, the kids and everyone else will just like let you drive. And you cannot accept it when you walk in. So I think it's just one of these models where you might hold back a little bit, but like at one point you're just gonna give up and you just like, okay, like screw it.

I'm in it for whatever this ride is, and then you that's sort of the experience that that we're laying up for. Yeah.

Rob Litterst (12:10)

It's like list price is kind of like the price of admission, right? And there's going to be more spending along the way.

Free grants and promotions in a credit model

Rob Litterst

Yeah, I think like one thing that they've done that's really interesting is these free grants that they do. And this is something that I think is kind of like unique to credit models. Like you didn't really see this with seats. Like they're there what because if you're buying a seat or just like a standard license of anything, everything is kind of like bundled into that seat, right? The thing with credits that's interesting is you have like all these actions and stuff that are kind of like itemized by certain numbers of credits that they consume, right?

So all of a sudden you have this flexibility to actually give away things for free within your credit model, like because these things just don't touch, they don't consume your actual credits. And so on a daily basis, Lovable gives away like five credits to build, four credits for AI monthly, 20 credits for cloud, one credit for connectors. So they give users a lot of opportunities to kind of like experiment with the product and like push into different use cases and really deepen their usage for free without actually hitting their credit meter.

Ulrik Lehrskov-Schmidt (13:14)

So one of the things that that Lovable, I think, has done really well. I don't know about the other ones of Cursor, Replit, these guys have done it as well, but they they've had like promotions such as, hey, for this weekend only, it's like free to build a Lovable. Yeah. And then they just drive like a ton of activity and adoption, and then you know, people fall in love with whatever it is that they build and they sort of stick around, right?

So it's one of these where they don't even have to cover up their intentions. Like it's so clear that of course I want you to track so that you stay and pay, but it still comes off as meaningfully generous in a way, right? Yeah. And the credit economy sort of allows you to do these kinds of things because the credits have actual value. So it's a little bit like your whatever corner restaurant that just says, hey, you know, we are celebrating our birthday, so food is free today.

And then everybody sort of goes and eats whatever it is that they serve, and you kind of get a relationship with the place and then you come back. These sort of types of sort of promotion-driven businesses have not really been a thing in SaaS before.

Rob Litterst (14:18)

It's funny that you mentioned that because that's something like Claude has done that too. I've noticed Claude will have kind of like a CTA on their pricing page. It's like double your credit limits through December 31st or whatever it is. Like they do the same thing. And that is like you mentioned earlier the Lovable kind of almost feels like the B2C vibe coding app. And like that's those sorts of promotions strike me as more kind of like consumer-driven, like consumer focused, like those kinds of like it's almost like infomercial style, like buy now, and you get, you know, whatever else you get with the product.

And I think like even further for Lovable, like you'll notice on their pricing page, like they have a section like Lovable for kids, right? So like they're clearly, I think, like trying to position themselves as like the most user-friendly of the vibe coding apps. And I think like when you compare them to say a Replit or and like I'm not gonna pretend I know like the exact nuances between Lovable and Replit, like I do think Replit's probably a little bit of a more technical product, but it definitely seems more approachable.

And like I have used Lovable and it's insanely easy to use. So I think they're doing a good job kind of like aligning product to positioning.

Functional, service and commercial features

Ulrik Lehrskov-Schmidt (15:32)

When I look through this, the way that I sort of parse features, like what I actually look for is like I have this sort of category system where every feature is like one of three kinds. So it's either a functional feature, which is sort of like custom domains, for example. Like it's a thing that's the software dollars or gives you access to. And then there are service features such as email support. Okay, so that's something that it's a support feature around it, or it can be a credit feature such as credit rollovers, or not so not like a commercial feature.

So actually what I'm seeing here, and which is a little bit interesting, is that they actually have a really good mix of all three. So they have the number of credits, they have credit rollovers, they have on-demand credit top-ups, which is kind of like is that a feature? Like, okay, you get to buy more stuff. I guess that's the feature, right? But they sort of list it as something that's good. Like, hey, you should buy this because you get to buy more things from us, like sort of that's the value proposition.

Rob Litterst (16:32)

It's interesting because like the I just covered this recently, but like I think it's Runway, or it might be Framer. What one of them uses top-ups basically is like an upgrade feature. So like they're basically using like credit flexibility as like a reason for people to upgrade. Yeah, but it is funny to your point. It's like, hey, pay me more so that you can pay me more.

Ulrik Lehrskov-Schmidt (16:52)

Yeah. So we have credit rollovers, we have on-demand credit top-ups, and then lower, like a little bit lower, which is kind of a functional but also commercial feature. We have per-member credit limits. This is interesting, where a lot of issues around AI pricing in general has to be with the unpredictable nature of the pricing. So, seat-based pricing, I would buy 100 seats, I would know what the price was, I put it in a budget, like everybody's happy. AI pricing is just like, who knows what the invoice will be by the end of the month, right?

So with these sort of measurement and control type functionalities in the product where I get to limit the credits or say, hey, I buy this much like compute or inference, and then Mike gets half of it and Sarah gets the other half. These kinds of control mechanisms can be really important to give me that sort of sense of control over my purchase. So we actually have a lot of these commercial features, even in sort of the basic pro plan, even something per member credit limits.

Like you could argue that, hey, it wouldn't this be something that you didn't have to give to like the cheapest tier, but you could use it sort of as a like a promotional upgrade driver, so like a distance plan. And then you have the functional features, which is like unlimited Lovable domains, custom domains, roles and permissions, remove the Lovable badge, stuff like that, design systems, and then service features is just like email support. So they actually cover all three bases and they do and I would say for what it is, they make it sound like a lot.

Rob Litterst (18:27)

Like to your point, I think like the like some of these could be like the user roles and permissions, per member credit limits, like those could totally be admin features that you use as a carrot to upgrade. So I do think it's notable. Like they really like their baseline plan is very sophisticated in like how you can manage your credits. And I they actually recently published to their changelog the ability to set limits for credits for different people and get alerts when you're approaching your limit.

And that's available on all of their plans. So like that's another piece of kind of like credit flexibility and management that I think especially for a company like Lovable where people are burning through credits really fast. It's super important to give people that access. But like notable that they are not withholding it on like the business plan. It's something they're letting everybody do.

Pro vs Business: tiered features and two credit types

Ulrik Lehrskov-Schmidt (19:15)

And then on the business plan, we have well, all the pro features, and then we have a new credit system. So something like business credits, and we'll we can sort of we'll double-click on that in a second. Yeah. But then we have like role-based access and team workspace. So this is actually so they have user roles and permissions in the pro plan, and then they have the role-based access and team workspaces. So this almost this is what I call a tiered feature.

So we have the feature which is like roles and permissions, and then people are like, Yeah, but we should have should roles and permissions be something we have in business, and it should be something we have in pro, and then you can deliberate like forever because there are like arguments for and against. So essentially what they've done is that they've sort of taken that functionality, like split it up. So whatever user roles and permissions is in pro is like the less advanced version of that because you have role-based access, which was apparently something else than user roles and permissions, and then team workspaces over in the business part, right?

So it's like taking sort of you're almost like from a featureless perspective, you're taking the same feature and you're using it twice just in like in a light and advanced version across two tiers, right? Which can be a great way to cut the Gordian knot if you can't like make up your mind whether a feature should be in like the middle or the first tier or whatever. Just like, hey, place it in both, but just in two different versions, and then they do personal projects.

So business is like very clearly four accounts that have more people in them, and now you get the option to like not share your personal stuff with everybody else, their security center, design templates, and then priority support. So this kind of like the business plan seems like focused on someone that really wants to collaborate a little bit more, also with single sign-on and so forth. So it's like, okay, now I'm actually like we're more people, we're all using Lovable. We should be able to do this in a way where we don't get into each other's hair.

Did we have some sort of insight into the difference between pro credits and business credits?

Rob Litterst (21:17)

With pro credits, you get the pro features, right? So with business credits, you get the business features. So I think like another way to look at it is just that like I think another way to look at this would be like 50 a month and then 100 a month with 200 credits, right? Right?

Ulrik Lehrskov-Schmidt (21:32)

So they just said it's the same plan, like from a dollar amount, you just get half the volume.

Rob Litterst (21:38)

Exactly. And you get more features. So that's like that's their way, right? I guess of like pricing their advanced features, which I don't know. What do you think about that? Like, do you think that makes sense or do you think that's kind of like a confusing construct?

Why both plans cost $50

Ulrik Lehrskov-Schmidt (21:51)

So sometimes it's easy from a psychological point of view if you want people to compare plans to reduce the amount of things that they have to. Compare right. So it's like, hey, would you rather have you know a sandwich for 10 bucks or like a steak for 20 bucks? And now I both have to consider like steak versus sandwich, but also like is one 10 bucks worth more than the other? Like, so again, like I have multiple things to hold in my hand at the same time.

Essentially what they're saying is like, hey, would you have a rather have a sandwich for 10 bucks or half a steak for 10 bucks? And now the 10 bucks are the same.

Rob Litterst (22:30)

Right.

Ulrik Lehrskov-Schmidt (22:30)

And now I kind of only have to worry about the product. So at least like the 10 bucks, I can sort of I can park that in my mind because it's the same number. And now I can sort of worry about like which product I'd rather have. And I would say that the credit part, the 200 versus 100, that slips easy, right? I'm almost not noticing it. I would say that this is a either this is a test they run or they or they've run the test and they've found that this works, and it's a good way to get people signed up for the business plan.

And then actually I would be interested in like, does credits actually cost the same? Like the top-ups themselves, are they the same price, cheaper, more expensive? Or is the only difference just a hundred credits extra? So hey, you can you just click the drop-down menus on the credits like instead of a hundred? So oh, this is actually interesting. So are you joining the pricing page from the US?

Rob Litterst (22:30)

Yes.

Ulrik Lehrskov-Schmidt (22:30)

Yeah, so I think we have a VPN situation here as well because I'm joining it from Europe. So I don't know if you choose your browser, but also like your page was all black, mine is all white. So we're we have that. So interesting tier. So now we have a free tier, which is no credit card needed. We have the free grants, we have unlimited collaborators, five domains, cloud community support, and then we have so it's just like, hey, I can go in, I can create an account, I can maybe do something.

Rob Litterst (24:01)

What do you think about that?

Price localization: a free plan in Europe only

Rob Litterst

So they actually show the free plan on the European page and not on the United States page, which is interesting. It makes me wonder like, are they trying to drive more acquisition in Europe? Like, is that part of it? Or is that like buying behavior for like Europeans? Are Europeans more likely to want a free plan?

Ulrik Lehrskov-Schmidt (24:17)

Generally, the like as an index, US is willing to pay more for B2B software. Okay. So Europe is kind of split between Eastern and Western Europe. Eastern Europe is has less willingness to pay compared to Western. It's also poorer, just like on a you know, gross domestic product, and like so salaries are lower and businesses are less large and so forth. So usually if you have like global pricing, you'd go, hey, like US is whatever, index 100, Western Europe is maybe index like 85, 90, something like that.

Eastern Europe is like maybe 70, and APAC is maybe like 60. A lot of what European companies sometimes do is like they go to the US with the European prices, and then they'll learn that they can actually do like 30% more. And also that that the lower, like the floor, the lower prices are just like too low. Like and I think it's part of like a lot of American businesses are just larger than European businesses, and also yeah, they have like out of the gate larger ambitions.

So that's one thing. I think from the AI perspective, I think adoption rates for AI is just faster in the US. Yeah, I believe that. So maybe Lovable is maybe they're just running a test and that's what we call it, or maybe they're just like trying to make the entry point lower or easier for European customers because well, because that's required in Europe.

Top-ups: a 20% premium and auto top-up

Rob Litterst (25:48)

The top-ups are interesting. So they offer like two different ways to top up operationally. Like you can do a one-time top-up, select add credits and then buy once and choose an amount, and the credits will be added to your workspace immediately. Or you can auto-top up, which is where Lovable will buy credits automatically when your balance reaches or falls below a threshold that you set, up to an optional monthly limit. So, like you can basically set up, like, say when you like fall below 100 credits or something like that, you don't want to run out, right?

While you're in the middle of something. So Lovable will automatically buy however many more credits. And they give like a bunch of different denominations that that you can choose. Like I think the default is 100 credits, but they have like 50, 100, up to like 10,000 credits. And then you can say like when my balance falls below 25, 50 or 100 credits. The general credits in the pro plan are 25 cents per credit, right? The top-up credits in the pro plan are 30 cents per credit.

So 20% premium you're paying for top-ups, and actually the exact same thing on the business plan. So on the business plan, general credits are 50 cents per credit and top-ups are 60 cents per credit. So you're paying that same 20% premium to top-up.

Ulrik Lehrskov-Schmidt (27:06)

So it's interesting where the actual sort of building activity of the credits is a full double the price on a business plan. So I get additional features. Do I get that many additional features? I think it's one of these where I would imagine that they get some friction. Like if I'm a whatever, a large customer and I'm spending, let's say tens of thousands a month on something like this, like essentially I'm paying tens of thousands a month for the added features, which was like some workspaces and some advanced roles and permissions, and a little bit of like security lock, which is like that seems rich.

Like that's a whatever, that's a six-figure platform fee, essentially, that I'm doing it, but that was just loading, you know, the credits themselves. Like that model itself will, whenever they now onboard a sales team, because it's so obvious in the way that they structure their pricing, will give them pushback. Yeah, whenever if they try to sort of like sell more enterprise deals or larger deals.

Rob Litterst (28:08)

Well, it kind of feels like they're shooting themselves in the foot by giving away so much in the pro plan, right? Because it makes it so that there's not a huge difference between pro and business, which is what makes that kind of price discrepancy seem like a lot, right? If the pro plan was like way more kind of like prosumer focused and like kind of consumer focused in general, and didn't give you so much flexibility and optionality, then I think that that premium on business would make more sense.

But they give you so much with pro that I think it's kind of hard to justify paying double for the business plan.

Is the enterprise plan enterprise enough?

Ulrik Lehrskov-Schmidt (28:42)

Yeah, and I would say what you see over in their enterprise plan is kind of a little bit like what you would expect from a like just decent like dev setup, restrict who publishes and invites. So that's like they can get another like layer of roles and permissions, right? And audit logs, which is like, okay, so is audit logs really maybe it's an enterprise feature, but maybe it's not, right? It's almost like their packaging is too narrow. Like the feature difference between enterprise isn't enterprise enough or advanced enough, and their pro plan, the first plan, is almost like too advanced for let's say the kind of prosumer role that that they have.

So one version of this could be hey, maybe you need to, if you really want to have a sales team and go sort of upmarket on that and go after sort of the Cursor, Replit sort of segment, maybe you want to like focus on building out that part and then taking some of the pro features and just like loading it into business and having sort of a broader range between what I can do. Then I would probably also on the European page set like platform fee and then contact sales, and then here on the end of like in the US page is like 680 a month, which is like, and then you have I think it's 10 months for an annual plan, so it's like 6,800 a month.

Why not create a system where an enterprise plan would be whatever the number is, like 20, 30, 50, 60, 80, 100k flat, and then give me access to buy credits at a very reasonable rate, maybe with like very good volume discounts. Right. So if I know that I'm gonna be like a three, 400k account, I don't mind paying like the 80k upfront platform because I know the product, I know that this is how we want to work, whatever. And then I get access to sort of the deep volume discounts.

But right now it feels like I'm getting punished for volumes if I'm large, right?

Forward deployed engineers and the case for services

Rob Litterst (30:42)

Yeah. Like what's interesting to me about they're kind of like forward deployed engineer and the fact that they give they offer these services, I think it makes sense. Like I actually feel like services are severely underutilized a lot of the time with SaaS companies. Like I think services can be a great way to generate additional revenue and get people to be more successful with your product. But I feel like the positioning we've been talking about for the Lovables, they're kind of like the user-friendly vibe coding app, right?

So like in theory, you would hope you don't actually need an FDE to help you navigate Lovable, right? Like I feel like that's kind of like the general idea. But I think the fact that it's an enterprise add-on is kind of illustrative in like what they're doing here. And I'll actually share, I found a job record job posting for an FDE at Lovable. So let's see. I think that like the idea here is that you're gonna kind of like allow love, like figure out how to get Lovable just like permeating throughout the organization, right?

So like you're gonna work directly with customers to understand their workflows, turn ambiguous requirements into technical solutions, translate insights from real usage into platform improvements, own projects and the idea is that these forward-deployed engineers aren't necessarily there to like help like a single dev like get to be successful with Lovable, but I think like be able to stand up Lovable within the organization and ensure that it's like this critical building block of your kind of like AI native SaaS company.

Ulrik Lehrskov-Schmidt (32:12)

Like the way I read this is actually like what you'll do is like you'll vibe code for our customers.

Rob Litterst (32:17)

Yeah, right.

Ulrik Lehrskov-Schmidt (32:18)

Like so it's like you'll work directly with customers, okay, to understand their workflows, needs and problems. Okay, so why would that be necessary? Like they have Lovable. So it's like, so the customers are like, yeah, we want to whatever, have a better business. And then you have to ask, like, what does that mean? And then you say, Well, our whatever, our support is broken. And like, okay, your support is broken, and then it's like turn ambiguous requirements into clear technical designs and working production systems.

So it's like, okay, so you sit down and then you say, Okay, let's do a support app for you guys. And then the customer says, Oh, goody, like, create the report Lovable. So it's like one of the way it reaches me is actually like your vibe coding for the customer. They're like, it's almost like you don't even have to use Lovable. We'll send a guy to do it for you, and he'll sit in your office, use Lovable, and then you can just tell him to do things, right?

Because it's almost like the ultimate untechnical users. The way I use AI is like I hire a guy to do it for me. Yeah. And then no, we have the guy, so you don't need to hire him, right?

Rob Litterst (33:20)

So you're yeah, so you're saying it's more so for those untechnical customers that don't even want to vibe code themselves. Like this is the way you get Lovable into your org, which I think makes a ton of sense. One thing that I think is interesting about this, and just about AI in general, is like it's it can be really hard to think through, like on the spot, think through all the things that you can do with these AI products. So, like I started using Grokbot probably like a month ago.

I had like a few kind of like early use cases that I was trying to solve with grok bot, but as I've used it more, all of these new ideas for using it have kind of like sprung up that I never would have thought of before I started using it, right? So it's like action creates all of these other ideas and possibilities. And I think like with this FDE, like what's interesting is you've got probably like these old enterprise like legacy companies, they have no idea what they could do with Lovable, right?

So you get an FDE in there, and the FDE starts interviewing them about their internal systems, and that's where you start to understand, okay, like this is what we can actually do, and then you can like let the FDE actually do it. So I do think there's like a huge benefit to just injecting your org with like somebody who thinks from like an AI native perspective. Because until you start building with these products, like you just have no idea what they're capable of.

Ulrik Lehrskov-Schmidt (34:42)

That's so right. So when you're in the bubble and you're like you know, hitting refresh on the AI news of the day and you're testing new models and you know, your friends or customers or colleagues are like freaking out because you know somebody updated something, you kind of forget that 95% of the world hasn't even logged in to try it yet. And sometimes like when you're when you when your business is to get people to log in and try it can't you try you you're kind of like ideating on like what could we do to get them to try it?

Like so I appreciate this idea that for a company like Lovable, they're sort of saying, hey, okay, so we can of course make a better user interface, we can promise people that it's gonna be super nice and easy and pain-free. But maybe what actually gets them to say yes is that we just say, hey, don't worry about it, we'll just send a guy. And people are like, okay, like then I'm in, right? And then for some customers, that might be what pushes them over the top, and then they're in, right?

And I think one of the things that are so I actually I had another client on a call earlier this morning, and they are, you know, they're like at eight figures ARR. They do sort of like agents for small and medium-sized businesses, and they were like debating services. And so he was saying, hey, yeah, we actually found out that when we do onboarding, they their product is like 50 bucks a month, like a few hundred bucks a month, they have a credit system as well.

He says, Hey, when we do onboarding, churn is much lower, and then consumption is actually higher. And then he says, When's when one of our agencies do onboarding, he said, like some of our agencies like charge 4 to 10k for onboarding on a product that has an average ACV of like 3,000 a year. So it's like, okay, so that should be a hint to you guys that you can maybe charge more for the product. But then he said, then the consumption on those accounts is 10 times higher.

And it's like, of course, because you have these whatever 20 agents, like one for what it's social media, on this for like bookkeeping, whatever, like a bunch of little like business automation kind of stuff. If that is properly set up in the business and somebody's actually like plugged it in and it works, and like, okay, it's actually doing the thing, all of those consume credits. So your service essentially to go into you know your customer's business, like installing lamps, and now you're charging them for electricity, right?

Like, yes, of course the consumption is going to be higher. You installed the lamps. If you just send them the lamp and they have to install it, it's gonna be a while until they get around to doing it, right? So the service actually you can charge for it directly, like, oh, pay our guy like whatever, 200 bucks an hour, and then we'll send the FDE. But the FDE actually also like increases consumption, and that consumption actually compounds. Like for every hour the FDE spends, he might produce a consumption loop that pays off months or years after that.

A lot of people just miss that with AI services.

Rob Litterst (37:36)

I watched this awesome video from this guy, Pat Grady. He's an investor at Sequoia Capital, and he was talking about like the diffusion challenge right now. It's like what AI can do versus like how many people are using it basically. And I think like what we're talking about right now is illustrates that really well. It's like the people that are like in Silicon Valley or even just like the AI-pilled companies that are like really getting into this are using it for like everything, but then there's a massive part of the population that's like not using it at all.

And so these FDE programs and like these deployment covers for like I think Claude just announced that they're gonna set up like 10,000 companies or something like that with like deployment support. OpenAI launched a deployment co a while ago. Like that's their whole entire strategy is like we need to infiltrate these organizations that are not using AI yet and get them using it. It's an interesting strategy, and I totally agree. I think the super underrated part of FDEs and services in general is how much more usage you will get.

So like I feel like people shy away from services because it's not like the beautiful subscription recurring revenue, but they don't realize that like A, you get like a big chunk of money in a one-time lump sum, which you know it doesn't suck. And then B, you're actually going to get people to use your product more. And as more SaaS companies move towards consumption pricing, like that is going to show up in your recurring revenue. So I think that's a great point.

Ulrik Lehrskov-Schmidt (38:58)

A lot of companies, so just like going off on a tangent of this with services, not for Lovable in particular, but just a lot of companies that talk to have this, they're whatever, they're at five million ARR or 15 or 50, or and then they're like, oh, services won't scale. Maybe not at maybe they will, like maybe they won't, but they will at least get you to the next level. Like whatever that next like five, 10x of your business is, services will almost certainly get you there.

And you can always like stop doing services whenever like you're so awesome and growing so fast that it doesn't make sense anymore. But if you're not hanging on for dear life because you're growing so fast you can't keep up, services are a pretty good way to grow faster or for almost everyone, right? So it it's just such a slept-on like superpower for most of these businesses.

Nobody knows what a credit buys

Ulrik Lehrskov-Schmidt

We actually have no idea what a credit buys. Like the actual unit of what a credit does is like it's we'll you know, we might tell you, but we'll tell you when you spent one. So you'll push a button and then it'll consume some credits, unknown amount. And you just so you have no idea like how many credits will I need to do my app. Well, no, no, you don't know. AI kind of like entered the market so forcefully and was so much like a seismic shift in how technology worked that people just like went for it.

But from a commercial model, if you had if you'd introduced this kind of credit system like five or eight years ago, like I've done credit systems like pre-AI. And there was no way where you could have like launched a credit system where you just where you didn't specify like what it bought. Right. You're just like, hey, I'm gonna give you some examples and maybe they'll like kind of be close to reality, but maybe not. Like in you, but you just go ahead.

It would just not have taken off. But now sort of expectation to pay, like habit, like other people are doing it. It's sort of this is how it works. We kind of have an understanding of sort of the cost structure. So I do a credit, they buy their credits from OpenAI or Claude, and they that costs money, and then at the end there's a data center and there's some electricity, and like whatever. So we have this idea that you know there's some sort of like fairness architecture in the background, so that's why I'm paying this.

But that is all new, and it's actually quite new in the sense also that this is going to be different like a year from now. But I think a lot of these AI companies are also, especially like Lovable, is kind of like stuck in the middle where like one end of the market, which is like the hyperusers, like the ones that are actually consuming like 100% of AI today, they're kind of already used to this. And like they're like seven generations in on like, okay, what is reasonable and fair, and like what's the new thing?

But then Lovable sort of sits on that threshold where they still have to have new users come in that have no idea how this works, where they still have to sort of explain it to like a new user and say, hey, AI is this new technology, like this is how it's gonna work, and so forth. And they'll just like hold their hand and like pull them through this. And then I think that from a communication standpoint is just like a really difficult place to be in where you like do you want to both communicate to having ever tried it before person, and also to like living and breathing AI for multiple years, person.

And that the range between those two is just like very very wide, which I think is why their credits and usage documentation page is extremely long.

Rob Litterst (42:28)

It's like there's a lot going on there, like it's a very long and kind of like exhaustive read. But to your point, like they don't say exactly what a credit buys, and I think that's intentional because the price, like the underlying cost of what it buys changes so frequently, like the cost of these models are going down. And so if you marry if you get married to like how much a certain action is worth, that's gonna change in like a week, you know?

And it's like so Figma used to do this thing where like on their credit table, they would put the date that they last updated, you know, on August 28th or whatever. And I thought that was interesting, but that just seems exhausting to have somebody on your team who actually needs to like go and update that. And like maybe they have like an AI agent that goes and updates it, like whenever it gets updated, but it is a it's a challenging dilemma for sure.

The verdict: buy, hold or sell?

Rob Litterst

All right, so at the end of every episode, we grade the pricing page. So kind of classic Wall Street style, buy, sell, or hold. And to be clear, this is just the pricing strategy. This is not the company. Ulrik, what are you doing with Lovable's pricing? Buy, sell, or hold.

Ulrik Lehrskov-Schmidt (43:35)

I think it's a buy. I think they have it's not a 10 out of 10, but I think they have things working for them for the kind of prosumer business segment they are they're at that does work on. I think the credit system, which is sort of at the core of it, is very strong. I think they've executed it not perfectly, but well enough for what they're trying to do. So I think that works. They're gonna keep growing. I think they're being outgrown by some of the others that have done better.

But they're definitely like yeah, they they're one of the ones to watch and they will remain there for a while.

Rob Litterst (44:16)

I think they're getting I think like they're probably getting some business taken away from like the main labs, right? Like OpenAI and Claude, I think are kind of going in their direction a lot more. I but to your point, like I think that they're like a classic case to me. I would buy them as well. We've talked about this before, where it's like how you price is like the most important thing. How you package is probably the second most important thing.

And then like actual price points is probably like whatever price you're putting on top of that is probably in a lot of ways like the least important thing. Like, obviously, like there are exceptions, but like and in commoditized markets that changes. But I generally think they have a great pricing structure and they take it extremely seriously. Like their credit model is very sophisticated and they do a lot of things that other companies that offer credits do not do to help customers understand what they're spending, give them a lot of flexibility and control, and like help them manage their credit limits.

And for that, I give them a ton of credit. And like if we're going like out of 10, I would put them like at a baseline just because of how well they do that, at like a seven, right? And then it's like the packaging maybe gives them a couple more points. I think the price points are I like I find the business credits versus pro credits to be a little bit confusing myself. Like I'm just like not really sure what it means, and I it just feels like a weird way to do it.

Otherwise, I think they're doing a pretty good job.

Rob Litterst (45:32)

That is it for this episode of Pricing Page unPacked. If it was useful, subscribe to the podcast on your podcast provider of choice or find us on LinkedIn, the PricingSaaS community, or on YouTube. And remember, your pricing page is not just a page, it is a strategy statement. See you on the next Pricing Page unPacked.