The parties define a measurable outcome and how payment depends on achieving it. For an AI service, this might be an accepted completed task rather than a seat subscription or the number of model calls.
The agreement needs clear completion criteria, attribution and handling of partial or failed work. A claimed result should not be counted automatically when quality or the service's contribution remains uncertain.
ELI5
Outcome-based pricing means paying for a defined result. For example, a service might charge when an agreed support task is successfully completed rather than for every message it processes.
Both sides need to agree on what counts as success. Otherwise a service could claim that a job is done while the customer still has important work left.
Is it the same as usage-based pricing?
No. Usage pricing measures resources or activity, while outcome pricing depends on a specified result.
What makes an outcome measurable?
Clear acceptance criteria and a reliable way to verify completion make the result easier to assess consistently.
