There’s one factor not being talked about enough that could dramatically affect AI adoption:
How much it costs customers to access the latest and greatest AI capabilities.
According to a new report from The Information:
“More than 600 of Microsoft’s largest customers, including Bank of America, Walmart, Ford and Accenture, have been testing the AI features in its Microsoft Office 365 productivity apps, and at least 100 of the customers are paying a flat fee of $100,000 for up to 1,000 users for one year, according to a person with direct knowledge of the pilot program.”
The report goes on to say that Microsoft has been weighing two possible pricing models for all of its new AI features. In one possibility, Microsoft would charge an add-on fee to access the features. In the other, it would add AI features automatically to Microsoft Office and increase the price of subscriptions per seat.
Other firms are paying close attention. Both Box, a cloud company, and Coda, a productivity app, told The Information that they have considered raising their prices to cover the costs of running new AI capabilities.
As firms start charging more for AI capabilities, this could have major impacts for business leaders trying to build AI roadmaps for their organizations.
In Episode 50 of the Marketing AI Show, I spoke to Marketing AI Institute founder and CEO Paul Roetzer to learn more about how AI prices will impact productivity, performance, and knowledge work.
- This could create problems for many AI application companies. If Microsoft and Google start baking all of the best AI capabilities into existing tools for a reasonable price—and they work as advertised—how does that impact the other tools you buy off the shelf? “I start asking myself, ‘What do I need these other application companies for?’” says Roetzer.
- To navigate pricing changes, build the business case. The business case for a tool gives you at least an educated guess as to how ROI you get when prices go up or additional charges for AI capabilities appear in your subscription. “You're going to be able to build these kind of business cases to justify these costs,” says Roetzer.
- Small businesses might not have much to fear here. It’s natural to think price rises across the tech stack will hit small businesses hard. Roetzer disagrees. “As a small business, I don't think you're going to get priced out of this.” In past pricing strategies, Microsoft and Google (among others) have shown they intend to make product versions that are affordable for smaller firms.
- But beware of tech creep. “The thing you have to be careful of as a small business leader or marketer, is that you don't just start stacking a bunch of AI tools that you don't really use,” says Roetzer. You need to stay hyper-disciplined with your pilot programs to avoid paying for unnecessary tools. Roetzer recommends you test tools for 90 days, fully use the features and capabilities, and make sure you’re fully trained on how to get value out of the tool. After 90 days, make a judgment call on whether or not to keep it.
- And remember: value comes in many forms. The dominant form of value creation right now is that AI creates productivity gains. But it can also increase revenue. Or save you money by consolidating other tools. Keep an open mind about the value it’s possible to create with sensible AI adoption.
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