tech
January 8, 2026
How AI Made Pricing Hard Again
Don’t be like MoviePass. Here are five pricing models for a world where growth costs you money.
TL;DR
- Traditional SaaS profitability relied on low marginal costs, where usage didn't significantly increase expenses.
- AI companies face high, usage-based costs, especially from LLM providers, making growth expensive.
- MoviePass's failure illustrates the danger of unsustainable pricing models where costs exceed revenue.
- Replit experienced a collapse in gross margins due to LLM costs, highlighting the challenge AI startups face.
- A new paradigm requires AI companies to rethink pricing to manage expenses and ensure profitability.
- Founders need to understand new pricing models and principles to avoid bankruptcy.
- Five pricing models are suitable for AI tools: usage-based, seat-based subscription, and subscription with overages.
- Seat-based subscriptions can still work, especially for collaborative tools, but may need price adjustments or AI credits.
- Subscription with overages is ideal for products requiring reliability, like code editors or communication tools.
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