Pricing and running AI products
Flat, usage-based or allowance pricing for an AI product?
Cal Renshaw, , 1 minute read
An allowance. A monthly price that includes a set amount of use, sized to the heaviest sensible month, with a clear charge above it that pays for itself. Your customer can predict the bill, and no customer can cost you more than they pay.
"What happens if I have a mad week?"
That was the builder's first question about the voice-notes tool. He meant spring, when everybody wants a kitchen at once and he does 3 site visits a day, talking into his phone in the van between each. He wanted to know whether that week would cost him a fortune.
I wanted to know the opposite: whether in that week he'd cost me one. The answer to both questions was the same.
The 3 shapes
Every plan you've seen is one of these, or a mixture:
- Flat. One price, use it as much as you like. Simple to sell. On a product where use costs you money, your keenest customers become your least profitable. The book's worked example shows a flat customer in a heavy month costing more in model fees than the whole of their price.
- Metered. A price per unit. You never lose money on a customer, but a small business can't budget for a bill with no ceiling.
- Allowance. A flat price that covers a set number of units, and a stated price for each one above it.
Setting the allowance
Size it to the heaviest month you'd be glad to have from a real customer, from your own records. Put the number on the pricing page, in units a customer recognises: quotes, documents, letters. Tokens and credits mean nothing to a builder. Then make the charge above the allowance pay for itself, and warn people before they reach it.
"Fair use" with no number is an argument you'll have later.
Who Pays for the AI? has the chapter, with the chart. The cost sheet has the sum.
Questions
- Is usage-based pricing good for AI products?
- It protects you, but small customers dislike bills they can't predict. An allowance gives both sides a ceiling.
- Should I price an AI product in tokens or credits?
- Price in the unit your customer thinks in: a quote, a document, a reply. Nobody budgets in tokens.
- What happens when a customer goes over the allowance?
- Warn them first, then charge the stated price per unit above it. No surprises.