From pricing new add-ons outright and raising prices for bundled offerings to simply getting an edge in negotiations, AI opens up a host of pricing strategies.
How should companies price AI features?
Companies can adopt various pricing strategies for AI features, such as charging outright for new add-ons, raising prices for bundled offerings, or leveraging improved functionality to enhance negotiation power without changing official prices. For instance, Microsoft charges for its generative AI services, while some companies, like Amplitude, choose not to charge for AI enhancements that automate existing workflows.
When is it appropriate to charge for AI enhancements?
Companies should differentiate between new functionality and improved functionality when considering pricing for AI features. If AI introduces net new capabilities that automate workflows, it may justify an additional charge. Conversely, if AI simply accelerates existing workflows without creating new ones, companies might opt not to charge, focusing instead on enhancing user experience and onboarding.
Can AI features increase revenue without raising prices?
Yes, companies can derive additional revenue from AI enhancements without raising prices by improving their products and gaining leverage in negotiations. This can lead to reduced discounts for new customers or faster sales cycles, ultimately driving incremental revenue even if the official pricing remains unchanged.