Unpacking GenAI Costs: New Challenges And Opportunities In Software Monetization
Summary
User-based pricing makes sense for companies that offer sales enablement software—it’s easy for a decision-maker to justify paying $2,000 a seat for a salesperson who is projected to generate $2 million a year in revenue. But as transaction models become commoditized, it’s difficult to get fairly paid for the added value these capabilities deliver, especially as many customers are now swapping human users for automated API calls. When software companies lack pricing discipline, it leads them to solve this problem by creating unnecessary add-ons, charging for these components on a different basis or even going down the slippery slope of based on partial use scenarios. Complicating matters further, with the advent of AI agents, algorithms can send requests back to an LLM, consuming even more tokens behind the scenes, where users aren’t able to fully understand their consumption. To successfully monetize GenAI capabilities, in many cases, a software company’s leaders should lean toward absorbing them, capping them in some realistic way (in other words, not offering unlimited usage) and making them part of the overall value of the applications being developed.