How Should You Monetize AI Features?

Author Palle Broe, who has held pricing strategy positions at Uber and Templafy and has provided monetization strategy consulting for numerous tech companies, analyzes in this article how 44 tech companies price their AI products and features. Based on this data and his own experience, he proposes a framework to help other companies decide how to price their own AI products and features. The article delves into three core strategies for direct monetization: value-added services, standalone products, and bundling with plans but with increased pricing. It also provides a decision chart to help companies determine pricing strategies based on the prevalence of AI features and users' recognition of their value.

How should you monetize your AI features?

AI features present new pricing challenges. To understand how to monetize them, 44 leading tech incumbents were analyzed, focusing on the application layer.

1. Pricing strategies overview

There are two broad monetization methods: direct (charging for AI directly or increasing product price) and indirect (integrating AI into existing bundle without price change or offering for free).
Five high-level strategies are observed: add-on, standalone, included in plan with price increase, included in plan without price increase, and free version.
2. What companies are doing
The predominant strategy (59%) is bundling AI features into existing packages, sometimes with a price increase (direct) or without (indirect).
23% offer AI features as an add-on.
18% have developed standalone AI products.
3. Choosing between direct and indirect monetization
Direct monetization is often better: It helps understand willingness to pay and cost structures. It's suitable for companies with high variable costs (like compute for LLMs) and clear customer value (e.g., GitHub Copilot).
Indirect monetization can work: When AI features boost core product usage, conversion, or retention, outweighing costs. Examples are Zoom and Shopify. But it's harder to track value.
4. Direct monetization deep dive
Step 1: Define AI's role
Step 2: Evaluate direct strategy options (Details not fully covered in this summary)