Pricing consultant Dan Bilkowski discusses why software companies hesitate to introduce 10x higher pricing tiers despite segmented power user demand.
Insight
Bilkowski: SaaS companies should never charge customers per token
“So now I'm also going to chart besides per seat, you know, charging you dollars per seat, but now I'm also going to charge you per token. This is a no, no. I call this showing your customers your underpants. You don't want to show your customers your underpant…”
Insight
Bilkowski: Premium AI plans are a no-brainer by replacing junior software developers
“And that can be, you know, if you're, you know, if your business is relying on it may be a no brainer because you're like, Hey, we're, I'm using this to write code, that code I'm able to sell for, you know, 10, 20 X, whatever I'm paying, you know, open AI. And…”
Opinion
Bilkowski: Google can lose money on AI indefinitely to pressure rivals
“They could lose money on their AI, like basically indefinitely. They could run the clock out on everyone else if they really wanted to, you know, keep pricing pressure on the market and run those other companies out of business because they can fund that type …”
Opinion
Bilkowski: Microsoft Copilot's value fell short of its pricing promise
“Turns out that the capabilities weren't quite there. And so I think that the, you know, the promise of the value was greater than what the realization was.”
Insight
Bilkowski: AI features introduce significant variable costs to traditional SaaS economics
“For the longest time, the incremental cost of serving an additional customer has been net negligible, effectively zero for AWS storage network and compute. And so now companies, as they're building in AI enabled capabilities into their platforms are seeing sig…”
Prediction Held up
Bilkowski: AI tools will adopt baseline platform fees with token overages
“Something like, say, a cursor or a lovable is a, you know, intermediary between you and these models. Likely what will happen is some sort of baseline platform fee, and then what looks like a added, added value cost per token on top of that that's fluctuating.”