Ramanujam: AI companies should revisit pricing strategy annually
Madhavan Ramanujam · Pricing your AI product: Lessons from 400+ companies and 50 unicorns | Madhavan Ramanujam · Jul 27, 2025 · at 52:00
Monetization expert and 49 Palms investor Madhavan Ramanujam discusses how often AI startups should review and adjust their pricing models with Lenny Rachitsky.
0:00 / 0:16exact quote · 16.0s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“Back in the day, we used to say that you should revisit your pricing strategy, overall pricing model, you know, how much you're charging at least once in two years. With AI, that's probably reduced in half because of the scale with which and the speed with which companies are built and competing.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Madhavan Ramanujam
Ramanujam: Autonomous AI software can capture 25% to 50% of created value
“In the classic SaaS situation, we used to say if you can charge 10 to 20% of the value, that's actually great. But in AI, you can actually charge 25 to 50% because it is autonomous.”
Ramanujam: Outcome-based AI pricing will jump from 5% to 25% in 3 years
“In, there are a lot of benchmarks and studies that actually show that, and this is also my belief, that in the next three years, that five percent number will move to 25%.”
Pricing low to drive growth is a fallacy without Amazon-like costs
“Often I see entrepreneurs who say, let's just price low to like grain, gain growth. That's a fallacy. I mean, if you don't have a business model that actually supports this compared to Amazon, then You probably know shouldn't be in a penetration strategy.”
Economic downturns are the optimal time to transition to usage-based pricing
“Frankly, this is the best time to actually think about these things. Like if, you know, if people are not using the product, changing it to a usage-based, people would say that's great because You know, there's a downturn. We're not using the product. And they…”
Ramanujam: Effective B2B value selling requires creating needs rather than discovering them
“Many founders show up and try to understand what are the needs of the customers. That's one way to look at it. But you need to be able to create needs rather than just discover them, right?”
Ramanujam: POCs should co-create ROI models rather than test feature functionality
“The right way to think about an ROI model is to actually co-create it with your customers from day one, which means You know, agree and validate on the assumptions and the inputs. So like, Hey, how long does this process take today? How many engineers are ther…”