Overcoming the Challenge of Constructing a Feasible Pricing Strategy for Generative Artificial Intelligence Capabilities

In October, Box unveiled a new pricing approach for the company’s generative AI features. Instead of a flat rate, the company designed a unique consumption-based model. Each user gets 20 credits per month, good for any number of AI tasks that add up to 20 events, with each task charged a single credit. If the customer surpasses that, it would be time to have a conversation with a salesperson about buying additional credits. Spang says, for starters, that in spite of the hype, generative AI is clearly a big leap forward, and software companies need to look for ways to incorporate it into their products.

Box has announced a fresh new pricing approach for their generative AI features, unveiled in October of last year. Instead of using a standard flat rate, the company has developed a unique consumption-based model.

Under this new model, each user is given 20 credits per month, which can be used for any number of AI tasks. Each task is charged a single credit, allowing for a total of 20 events. If a user exceeds this limit, they can tap into a company pool of 2,000 additional credits. When that pool is exhausted, it may be necessary to speak with a salesperson about purchasing additional credits.

According to Box CEO Aaron Levie, this approach allows for a more accurate and fair way of charging based on usage. It also takes into account the cost of using the OpenAI API, which is utilized for the underlying large language model.

On the other hand, Microsoft has taken a more traditional route by announcing a price of $30 per user per month for their Copilot features. This cost is in addition to the regular monthly subscription fee for Office 365, which varies depending on the customer.

While it has been evident for some time that enterprise software companies would begin implementing generative AI features, the challenges that SaaS companies face when doing so were discussed at a panel at the Web Summit in November. Christine Spang, co-founder and CTO of Nylas, a communications API startup, and Manny Medina, CEO of sales enablement platform Outreach, shared their insights on the matter.

According to Spang, despite the excitement surrounding generative AI, it is undoubtedly a massive step forward. Software companies must find ways to incorporate it into their products. She stated, “I’m not going to say it’s a perfect 10 where the hype meets reality, but there is definitely value there. The key will be how companies utilize the technology and connect it to other systems and apps to truly drive value in different use cases.”

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Zara Khan

Zara Khan is a seasoned investigative journalist with a focus on social justice issues. She has won numerous awards for her groundbreaking reporting and has a reputation for fearlessly exposing wrongdoing.

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