AI’s pricing reset: when more productivity means less profit

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Owen Raszkiewicz (1:00)

There's a problem underneath the excitement about AI. The way businesses create value is changing, but the way they charge for it may not be keeping up. That can make a business more productive without making it more profitable. To understand why, we need one simple idea, unit economics.

Hey there, here's a quick note. This podcast contains general financial information only. That means it's not specific to you, your needs, goals or financial objectives. So don't act on the information until you've spoken to your financial planner. You'll find our full disclosure, disclaimer and link to our financial services guide in the show notes. Unit economics. It means looking at the money earned and the costs incurred for one business unit. It could be one customer, one job, a transaction or a month of software access. For example, suppose you charge $100 for a service and it costs $60 to deliver. Revenue minus costs is 100 minus 60, leaving 40 in your pocket. AI can change both sides of that equation. Take a software company charging by the user. Its monthly revenue is users multiplied by subscription price. 10 users pay $100, produces $1,000. Now imagine AI lets four users complete the same workload. Four users at 100 means $400.

The customer may be getting just as much value, but the provider of the software is capturing less revenue. Meanwhile, another business might charge a flat subscription while paying computing costs every time its AI performs a task. More usage could mean more costs without more revenue. The number of people logging in may no longer tell you enough about the value created or the cost of delivering it. This matters to a small agency charging by the hour, a global software company selling subscriptions, and any business trying to budget for AI.

So the question becomes, where is the value being created and how do you charge for a share of it? A customer doesn't necessarily value another login. They might value an inquiry solved, a qualified lead, or a shipment that's processed. The challenge is connecting that value to a price the customer understands, a cost the business can sustain, and a billing system that can be used to measure it. This is the pricing reset. Not simply changing how much you charge, rethinking what you charge for and whether doing more of it, actually makes you more money.

Good day, it's Owen here, and welcome back to The Business Stack of the Future, brought to you by Stripe. In generative AI at work, researchers studied 5,172 customer support agents. They found that AI assistance increased issues resolved per hour by an average of 15%, although gains varied between workers. That was AI helping people, not replacing them. But it shows why counting the number of users may not fully capture the value delivered. To understand how businesses turn that value into revenue, we first need to get clear on 5 terms that explain what customers are actually paying for in the modern era. First, a subscription is an on-going commercial relationship, not necessarily a fixed bill. A seat charges for each user's access. Usage pricing charges for activity or consumption, such as transactions or computing. Outcome-based pricing charges for an agreed result. Credits are provider-defined. They're units that measure consumption but not necessarily complete a task. These models can overlap. A subscription might include some seats, some credits and extra usage charges. The distinction matters because one person can trigger many actions to achieve just one result. A customer wants their booking changed correctly, not 10 system actions. Are you charging for access, activity or a result?

Intercom shows what this looks like in practice. The first example that I want to bring to you is Intercom. You probably know Intercom as the little chat widget that sits on the website of many globally relevant businesses. It has something called Fin.AI. It's a product that handles customer service conversations with chat and email pricing starting at 99 cents per outcome.