Gupta highlights the benefits of usage-based pricing for generative AI, given the variability in resource consumption based on prompt/output size and frequency of use. He suggests that companies should meter both front-end usage and back-end resource consumption to gain a clear understanding of usage costs and margins. This approach, he argues, will result in fair and transparent pricing, facilitating user growth and adoption.
Key takeaways:
- Monetizing SaaS and AI requires a business model change, not just a pricing change, with accurate metering and usage-based pricing models being necessary.
- Usage-based pricing is a natural fit for generative AI due to the variability in resource consumption based on the size of prompts and outputs.
- Companies like OpenAI, Twilio, Snap, Quizlet, Instacart, and Shopify are already leveraging usage-based pricing to monetize AI.
- For transparency and fair pricing, companies should meter both front-end usage and back-end resource consumption to understand the underlying cost footprint.