Abde Tambawala’s Post

Part II of our blog is out! In this installment Abde Tambawala and I explored usage metrics and pricing models across different AI modalities and discussed how traditional User-based subscriptions will need to be supplemented with usage metrics. Take a look and let us know what you think! #pricingstrategy #ai #monetization

If you're wondering how AI will be monetized, and how we'll come to pay for it, this article by Abde Tambawala and https://lnkd.in/gYJxgPSS is worth a read. If you're building an AI-driven product and are thinking about how you'll price and package it, this is a must read.

Sam Lee and Abde Tambawala explore AI monetization in their second blog post and share a guide for how fo build your own model! If you’re looking into your products pricing, it’s time well spent. The key unlock in my view is understanding that even though subscription is the dominant option (choice) today, it may not be the right one for the future. Companies need to innovate here, just the same as they do with their core product !

How to monetize AI is a tricky and important decision for any company, and there's no quick fix that works for everyone. The good news is there are frameworks that can help! This fantastic write up from Abde and Sam is a must read for anyone trying to monetize an AI-based product.

There is a decade long war starting to brew up between SaaS incumbents and GAI-first upstarts. Will the existing workflows owned by incumbents marginally improve with AI sprinklings or will they totally get rewritten, reimagined and rewired - with generative AI as the OS of those flows? Less forms, more prompts. Less widgets, more chats. Less clicking, more spawning and commanding the agents and reviewing GAI agent work. Different starting screens, different notifications. Why are workflows so important? In SaaS enteprise, workflows are not only the layer where user adoption accrues and gets monetized but also the most - up the stack - value layer where knowledge work originates and culminates. It’s where digital knowledge workers and the context of work lives. Workflows are and will remain the King! (That’s why all the talk of wrapper companies is just lack of foresight). While incumbents are infusing AI in parts of their existing workflow, upstarts are asking the question - “what’s possible now that wasn’t possible before and what’s the new workflow to enable that”. They are starting from a blank slate. It’s not that incumbents are unaware but existing incumbents workflows are super hard to change. Your users depend on it. They are habituated on them. And your teams are reluctant to refactor them. Who wants to refactor user experiences, pages, object models and services in one go! Too much at risk. Workflows drive revenue and business teams don’t want to touch their sticky cash cows. That’s why incumbents are thinking - IMPROVE vs revamp. Upstarts on the other hand - will find niches in the market, launch reimagined workflows and over several years democratize the new workflows and redefine the gold standard. Ironically some of these upstarts will need and integrate with existing incumbent workflows to grow faster and put value in the path of existing usage. Previous of era of AI - predictive AI - was very localized and didn’t really have the potential to reshape how we work in digital mediums. Generative AI does. It is changing the definition of digital interactions and the workflows they span. - Meeting attendance is changing. You can join later and get caught up via AI summary of discussion. - Everything is recorded. Recordings are content - ChatGPT is conditioning us to prompt. More prompts, less forms. - Searching vs task completion Co-pilot is an additive concept which is relevant today to describe the function of AI. In future these distinctions will dissolve and the all the things that survive or get created will have invisible co pilots. What do you think? #startups #founders #enterprise

Overview of Pricing Strategies for AI Applications 1. Most AI applications adopt a user-based subscription model, aligning with the concept of AI as a 'co-pilot' rather than a 'digital worker'.   - Over half of the companies offer a free version to facilitate early adoption, while about one-fifth provide a free trial.   - Two-thirds of companies publicly disclose their pricing information on their websites, with transparent pricing being more common in applications aimed at individual or professional users, rather than enterprise-focused applications. 2. Innovative Pricing Structures in AI Applications   - The second wave of AI companies is experimenting with highly innovative pricing structures that could accelerate customer adoption while capturing more total revenue.   - Companies like Chargeflow, Fin, and EvenUp have implemented success-based pricing models, where customers only pay for successful outcomes.   - This pricing model is attractive to customers as it establishes a win-win partnership, where payment is only required when the product delivers tangible results. 3. Pricing Models and Packaging Strategies for AI Applications   - Approximately 70% of AI applications adopt some form of free model, including completely free, usage-limited free versions, and time-limited free trials.   - Most AI application companies use a 'Good, Better, Best' packaging structure, differentiating between different package levels based on product features and usage.   - Companies like Browse AI offer up to five different package levels, combining subscription-based and usage-based pricing. 4. Market Adaptation and Growth Strategies for AI Applications   - Many AI applications are still seeking product-market fit, struggling to prove market demand despite having raised significant capital.   - The current key strategy is to make pricing predictable and ensure that cost does not become a barrier to product usage.   - While innovative pricing models are challenging, they are not the central focus in the early stages. #AI #ArtificialIntelligence #PricingStrategy #TechInnovation #SaaS #BusinessGrowth #SubscriptionModel #Freemium #MarketAdaptation #ProductMarketFit #StartupStrategy #TechTrends #AIApplications #RevenueModel #CustomerAdoption #GrowthHacking #EnterpriseTech #SuccessBasedPricing #DigitalTransformation #TechIndustry

"Generative AI expert" is a myth. We're all pioneers. No one's completely mastered the toolset yet. We're all figuring it out as we go. And that's exciting. We're at a point in time where there's no industry best practices. No "right way" to do things. You get to write your own playbook, based on your unique way of doing things and working. No marketers or copywriters have 15+ years of experience with generative AI. It's too new. That's a massive opportunity. I've gotten way further in business / entrepreneurship by being optimistic about new tech rather than pessimism. I've experimented, failed, succeeded, and learned a lot in the last 18 months of using models like ChatGPT & Claude. And I feel like I'm at a point where I want to start sharing some of the learnings. It'd be smart to invest time learning when to use (and not use) these tools. Because that's what they are: tools. An entire industry is already developing around generative AI for marketing, similar to SEO, email marketing, or social media. That's why I'm writing a newsletter focused solely on AI for copywriting/marketing. I haven't been this excited about a topic in a long time. Want to join me on this journey? Consider subscribing: https://lnkd.in/gJZBJ3xv

Discover the potential of #GenerativeAI in Vertical SaaS! Dive into our latest post, uncovering the transformative influence of AI-driven innovation on workflows and user experience. Read more: https://bit.ly/3IwrzwH #VerticalSaaS #TechInnovation #netsmartz #genai #ai #artificialgeneralintelligence

The weird situation many SaaS CEO’s find themselves in trying to navigate AI in 2024: 👉 You, the CEO, understand that AI has some importance for your company, and it would be good to do something about it. On top of that… 👉 Your marketing team is clammoring for an AI product to talk about publicly. 👉 Your board wants assurance that you’re taking a proactive stance on AI. 👉 Your CTO and Head of Product are supportive of using it, and have their teams running around, exploring ideas. You're ready to kick into high gear and start building, but for ONE MINOR DETAIL... Nobody has actually presented a business case for a plausibly useful AI project that can be delivered in an ROI-positive way. Why does this happen? Certainly, some companies simply don’t have a potential AI project that makes sense to pursue. But for every such company, there are many more that struggle with a good ol’ fashioned leadership gap. Everybody is “on board” with AI, but no single person has the combination of conviction and understanding needed to chart a path forward. And so those companies continue emailing around AI strategy slide decks, boats against the current, borne back ceaselessly into the past. — P.S. - Does this sound like your company? I’ve been experimenting with an “AI product sparring” engagement format geared toward helping product and tech leaders mold their AI aspirations into actionable plans. Please shoot me a DM if that sounds interesting!

Following up on my article on Value-Based Pricing, here are some insights on Pricing AI in SaaS applications: -Pricing AI in SaaS applications is a critical aspect, particularly with the emergence of third-party foundational model providers. -It's essential to integrate AI pricing considerations alongside development, marketing, and sales strategies, rather than delaying them. -Begin by evaluating the unique value your AI features add to your product, taking into account value creation and the impact on user experience. -Focus on creating distinct value by capturing proprietary data tailored to specific 'job to be done' (JTBD). -Usage-based pricing aligns the value of AI services with their cost and fosters innovation and flexibility. However, as AI features improve and become more valuable, this model may evolve towards more value-aligned pricing strategies. P.S.: If you've missed my recently published article on Value-Based Pricing in SaaS, you can find it here: https://lnkd.in/dXa-KYac #pricingai #valuebasedpricing