Mastering AI Pricing: Flexible & Agile Monetization — Mayank Pant, Stripe

Channel: aiDotEngineer

Published at: 2026-05-01

YouTube video id: CrqPcIZOOXA

Source: https://www.youtube.com/watch?v=CrqPcIZOOXA

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>> Hello. Hi.
I'm Mayank. I'm from Stripe and I'm the
billing solution architect working in
Stripe.
And today we want to talk about AI
pricing. So we've got a billing engine
and a lot of
nowadays a lot of AI companies come to
us talk about how they want to do
billing, how we can help them with their
AI pricing. So based on the research
that our Stripe team has done on in the
over the last 2 years and based on our
experience, we want to share some of the
learnings with you guys.
So as we all know, AI economy is growing
at a record pace.
They they are growing three x faster
than traditional SaaS and based on
uh Stripe data,
this is what we see, right? The top 100
AI companies
took 20 months to get to 20 million ARR
versus the top 100 SaaS companies which
took 65 months. So basically we are
growing at three x faster rate than what
we've seen before.
And though this is great, this is
exciting, but this is bringing new
challenges. The speed of
movement is so great that the companies
are now going global faster. They are
scaling up faster and
pricing that
pricing AI is becoming incredibly
challenging because of the speed that we
see.
So
we know that earlier it was traditional
SaaS pricing. Basically we had 80 85%
gross margins. They were not changing,
right? But with AI it's completely a
different thing, right? The margins are
low and
the margins get impacted based on how
many users are using your system.
So neither pure subscription nor pure
usage-based model offer us a complete
answer, right?
And the simple reason is we have margin
risk from power users. 5 to 10% of your
users can use 80% of your compute.
Uh external costs are unpredictable,
that is your infrastructure pricing,
right? Which can really hurt your
margins.
Technical pricing may overwhelm users.
What we mean by that is
for a product company talking in terms
of tokens, API calls might seem very
uh normal, but people on the other side
do not understand that technical
pricing. For me, for example, if I go
into Gamma,
I don't really mind how many API calls
am I using. I want to see how many
slides or how many decks did I
uh was I able to get out of the price
that I'm paying, right?
And
pricing is not able to keep up with the
product velocity. What might be a
premium feature today in 6 months maybe
a standard feature across. So are you
able to keep up with that pricing?
Uh so what we see at 33% of our
AI-powered business site unpredictable
compute costs as their concern.
41% say that defining the value that is
being delivered is is a concern, right?
And 84% of them talk about that we are
rolling out products faster, but we are
pricing is not keeping up with it.
So that is why what we say in iteration
is a competitive advantage.
The first price that you put in
is is a hypothesis. It is not a
commitment because you are bringing in
new features every week, every month and
with those new features and maybe the
old premium features are becoming
standard. So the pricing has to evolve
with the feature that you put in, right?
So frequent pricing change is a signal
of growth, right? You build the infrast-
infrastructure, you put your pricing in
the infrastructure that can iterate that
allows you to iterate rapidly, right?
So
this chart is one of my favorite. It
shows that hypergrowth companies which
are giving 100% plus year on year
growth, they are changing their pricing
three plus times in the last 2 years.
They are not standing with their
pricing. 49% is, you know, high growth.
They are they've changed three plus and
the low growth companies
are only 22% who have changed it. And
that means that those low growth
companies have a static product, right?
And that is not where you want to be in
today's age.
So now where are these companies moving,
right? If you look at it,
hybrid pricing which was only 6% in 2024
is 41%.
Outcome-based pricing is 5%, right? And
where it has it picked up from? Se-
seat-based pricing, SaaS pricing,
subscription pricing is all declining
because the models are changing.
So as I said, hybrid pricing seven x
increase
and now 56% of AI company leaders are
using hybrid pricing. Like we talked to
all the
all the companies such as Intercom,
Lovable, Eleven Labs, OpenAI and Tropic,
they are all building on Stripe, billing
on Stripe and all of them are using
hybrid pricing and I've also talked with
companies who were SaaS companies so far
which used to
uh help customer build workflows and
they were in SaaS pricing, but now as
soon as they bring
uh LLM AI into their product, then they
are also planning to move on to hybrid
pricing because SaaS pricing then starts
eroding their margins, right?
So to if if this is where we are going,
then
how do we start thinking about pricing?
How do we come to a right price? How do
we define our price? And how then do we
iterate it?
So the
we've got a five-step uh
a five-step framework for this and the
step one of that framework is you define
your value, right?
So what type of value can my product
provide? But not what your product is
doing, but what the what the customer
perceives your product to do. Like
again, like I took an example of Gamma.
For me as a customer, I need that
product to give me my presentation, my
decks. I don't care underneath how many
API calls is it making, where is it
going. My
uh for the for the customer it is the
quality of the deck and the relevancy of
that deck deck.
So 53% of hypergrowth companies have
offered clear value-based pricing that
the customer understands
versus just 26% of low growth peers.
And the way we look at it is
uh there are four broad frameworks on
which the first kind of these companies
are the company that are providing
automation. Like like I uh as a company
I'm helping them to save time and as a
customer what they are looking at it is,
okay, with the time saved I'm saving on
the cost, right?
Second is augmentation.
The number of people remain the same,
but the quality that they come out with
is much better. Like they can produce
images better. Probably for a campaign
provider they can build in better
campaigns more quicker. So they uh those
kind of augmentation the company looks
at it is, okay, I have the same number
of people, but they are more efficient,
they can deliver more value, right?
Third is the enhanced service. Maybe it
gives you an access to a proprietary
software
or some new uh data set that you
wouldn't have access otherwise, right?
For example, if you look at it look at
Stripe and our payment infrastructure,
we can uh do fraud recognition much
better because of the volume that flow
through us,
right?
And finally, the fourth kind of one is
the which gives you an improved results.
Like for example, company like Intercom
who says, I will price you based on the
number of tickets that I solved without
human need. So that is impacting the
direct bottom line. So once we realize
how we are helping the customers, how
our customer perceive it, that is when
we know the value and we know the price
that we can command in the market.
Once we've understood this is the value
that we are providing, then you define
your charge metric.
Like what is the billable unit that is
best representing my value,
right? And then you build features into
a currency that customers understand.
For example, is it consumption-based?
Like for an infrastructure company,
consumption-based might be the right
one. Like how many API calls did I help
you to make, right?
And this aligns to the cost of the
company that is providing that service.
Second could be the workflow-based.
Like how many images that was I able to
generate? How many documents was I able
to summarize? And this aligns to the
product,
and the third is the outcome-based as I
said.
How many business results did I
generate? So if if I am helping the
company to hire people, how many
uh candidate that I have put forward?
How many candidates were hired out of
those candidates resulting in saving
time? Or how many qualified leads did I
generate? Right? So, this aligns to your
customer ROI.
So, now that you've understood the value
that you're providing and you've decided
your charge metric against it,
we will we will see how they change it,
right? Like if you move from
consumption-based to outcome-based, it
is definitely easier to implement
consumption-based is much easier to
implement. But, it is harder to align to
value. Like if I if some company tells
me and says, "I allowed you 1,000 API
calls. I do not know what those 1,000
API calls mean. I want to see how many
decks I generated as in my previous
example."
But, if you go from outcome-based to
consumption-based,
it is easier to sell. Like I can
definitely go to a customer and say,
"I will increase your outcome. I'll
increase your
uh candidate hired, but to attribute
value is difficult."
So, that is where the balance has to be
made and data is required to satisfy and
to make your case.
One of the pro tip is to translate value
with credit. Like bundle the features
into credits. Say that
"I am giving you 100 credits for the
month. And then beneath under the hood
of the credits, you can have your own
models how you get to that." But, that
helps the customer to understand, "Okay,
100 credits and it will translate to uh
this particular ROI."
Once you've done that,
then that is where you pick your pricing
model. Now, is it a subscription fee?
The usefulness of subscription fee or
SaaS fee is predictable revenue.
It gives you a committed customer
relationship. Right?
How And then the second could be the
usage fee,
which scales with customer with protects
margins. But, the downside as I said is
for the SaaS fee,
uh your power users might burn your
margins. And for a usage fee,
uh the customer might be hesitant in
experimenting with your product. Like
going full deep because they do not know
what kind of a invoice will they uh
expend on this.
So,
pure subscription, pure usage-based was
a thing of the past. Now, as we saw in
the previous slides as well, everybody
is moving into the hybrid model.
So, what is the hybrid model? A hybrid
model will have a base fee and it will
have a scaling fee.
The base fee basically helps you to
establish a relationship with your
customer.
And the scaling fee or the usage fee on
top of it will allow them to experiment
as much as they want and then to pay for
the value that they derive out of your
platform.
So, you are not alienating any of the
user any category of the users.
Once you've established your
uh
pricing,
then you build in the guardrails because
a wrong bill can erode a lot of customer
trust. You might be doing great for the
three, four, five months, but if the on
the sixth month your bill goes wrong,
bill goes very high, then that those
customers go and then you work so hard
to retain those customers,
but then they leave you.
So, what safety feature do you
consider?
Like you are giving them flexible
pricing.
Now, you're building guardrails around
it, right? As the design principle is
fair it's simple here. Build fair
pricing,
but then do not surprise.
So, what what we what we advise people
to do is
put in usage caps.
Like I paid $20 and then I've been given
100 credits.
I say that after 100 credits, I've built
in a usage cap. You either pay more to
go ahead or we will stop and you wait
for the next month. So, that the
it is the customer that has remained in
control of their
uh usages. Right?
You build an automated notification. You
tell them when they've used 50%, 70%,
90% of
uh of their allocated limits because
this is building trust with the
customer. We are not trying to
uh cheat them. We are there trying to
inform them that this is what you've
used. These are the uh thing that you
can go ahead with now. You can top up.
You can do a manual top up. You can do
an auto top up. Or you can pause and
then start the next month when fresh
credits gets allocated to you.
And then you set rate limiting so that
no wrong code is burning through the
limits, right? So, this will protect you
and your customers both.
Once you've done these step one to four,
then the step five is you iterate,
right? You keep iterating.
84% agree that fast pricing adaptation
is a key competitive advantage.
As I said,
your first model is a hypothesis and you
keep building on that pricing as your
product keeps evolving.
You prioritize speed. You do not wait
for the right price right price point
and wait for a year before you put it.
You put a price point there which you
think is the right price point and then
you iterate. You talk to your customers.
Those guys who churn, you talk to them
and ask them why they are churning. Is
it a product-market fit?
Which is then you work on your product.
But, is it high price? Then you work on
your pricing. Right?
If they upgrade, you ask the same
questions. You run AB tests on pricing
to find the optimum point, but you
prioritize speed and you keep iterating.
And then you continuously realign to
your value.
Now, realigning to the value means as
you are rolling out new features,
you've already given them hybrid
pricing. You've already put in number of
credits. Under the hood, you can keep
changing what those credits means. Do do
those 100 credit that you've given them
means five API calls of a certain
category, 10 image generation of a
certain category? Whatever. So, under
the hood you can keep changing them.
But, you constantly
realign the value.
So, this is how all the companies have
been thinking about pricing.
This is how we've been
uh trying to help them. But, what is
most important in all this is
what kind of an infrastructure do you
have for your billing, for your pricing
that is helping you to do this? If every
change costs you
three months, four months, and a lot of
engineering effort,
then it is not worth it. So,
that is why it the infrastructure you
choose determine how fast you can
iterate.
And
uh from our side, the most flexible and
complete billing solution in market
is we've got Stripe and it is not us
that is saying it.
78%
of AI companies are building on Stripe,
which is a testimony in itself.
Most of the AI companies that you see
here
are building on Stripe like I said,
Anthropic, OpenAI, Lovable, Eleven Labs,
Intercom. They're all launching their
billing and
pricing. You might have associated
Stripe with
payments only, but in the last two,
three years we've
uh we've invested a lot into AI billing.
So, we've got Stripe Stripe billing
which allows you to go with subscription
pricing, usage pricing, hybrid pricing.
And as these companies are so quickly
within 10 to 15 months now starting with
the retail PLG motion going to
enterprises, we've got Metronome that
allows you to build all the
all the dif- difficult and complicated
contracts with the enterprises having
minimum commitments,
uh
pre-commitments, uh overage prices. So,
we've got that and we've got the whole
platform that allows you to do uh
payments, tax, invoicing, revenue
recognition
on this AI pricing.
So,
yeah, this is where we are right now
helping all our AI companies in the
market.
So, yeah, this this is me happy for any
questions
that you have.
Yes, please.
This is super interesting.
With the advice around changing your
pricing model fairly often,
one of the risks is that that can cause
frustration with customers and then they
might churn because of the
sort of the instability and it's less
predictable for them what their cost
structure is going to be.
So, have you got any advice around like
how to Yeah, so so what what people are
doing and what we also enable them to do
is they sell credits, right? But, what
do those credits mean? Like you got in
let's say
today in January you had one feature
that was your premium feature. It was
not replicated anywhere in the market
and you had assigned five credits for
that feature under the hood, right?
In six months, that feature becomes
standard feature. The pricing had
dropped and in the meanwhile you brought
in new features because you are also
competing in the market, right? So,
for the customer, he just see 100
credits.
Under the hood, you are changing these
these calls or permutations like what
feature means how many limits. So, the
it is remain transparent for the
customer, it remains fair for the
customer, but based on your product
feature, you can keep changing pricing.
Plus, we can we also have features where
it allows you to grandfather pricing
like you bring in a new version.
I who have been using it still keeps
getting it on the same price, but the
new users have to pay more.
Yes, please. At what ACV do you start to
get better rates and more of an
enterprise management structure? Like,
how how much payment volume do I have to
do before I can start to get better
discounts? So, again, more on the sales
side,
but it depends on the volume like your
payment volume and your billing volume.
Basically, we like we we have a
platform.
We allow you to use as much of a
platform as you want or as little of it
as you want, right? And then depending
on the volume that is coming and we we
bring in all together. Let's say you are
using uh payment and billing together
but not using tax, that is fine. You
bring your payment and billing and then
our sales people start getting into it.
The sticker price, of course, is there
for everybody to see.
I'm not really sure on what is the
threshold that you know, start bringing
the price down because that's more on
the sales side, but do come over to our
uh booth. We've got some sales people
there. They'll be able to give you a
better answer to this. I've explained
you the mechanism, but the threshold
they'll be able to answer.
Yes, please.
Your thoughts on the presentation was
really interesting. Thank you. And one
thing I'm wondering,
how does for example the pricing model
of like big AI labs relate to this
iterative pricing?
I feel like
AI labs often have like multiple plans
which have like very constant pricing.
And then
like the roll out of features always
happen first on the expensive plans and
then they trickle down to like That is
true. the lower pricing.
And I don't really see like they don't
really use like iterative pricing in
their pricing. No, no, they they use it
under the hood. So, for them, for you,
like even if you go to 11 Labs, you'll
see four kind of plans there, right? Uh
let me call it good, better, best, and
then enterprise, right? You will just go
for you go for the best, right? They
will keep adding features or removing
features from one plan to the other. The
pricing will
They will try to remain constant with
the pricing for you, but inside it the
features will keep moving and that is
why they want to give it give you
credits or we advise that you give
credit to the customer so that the
all these features doesn't start
interacting with pricing. Okay, like the
customer facing prices stay stay
constant but linked to which plan? Yes,
they they let me say not the pricing the
customer facing plan remains constant,
right? Price might change again, but the
features will keep changing because it
has been abstracted by credits on the
top. Okay. Right, that's it. Yeah, you
had a question, sorry. Um
Yes, sir.
My question is does your platform
provide like a way to
record every transaction in your
system like
>> Every transaction.
Uh
that costs something and the user we can
track it. Yeah, so what what we do is
like
if the prompted like you make a prompt,
uh the customer is ingesting some uh
calls, you will send those calls to us.
You will tell us like we have all kind
of pricing in there. Tiered pricing,
dynamic pricing, uh dimension-based
pricing. You tell us what kind of
pricing does it go and then it it comes
in, we are able to rate it and price it
for you. And then you can get the whole
report on exactly why
why the invoice is what it is so we can
give you all the detailed pricing.
Right?
Thank you.
All right, if you have any other
question, then please feel free to come
to our booth, floor three, right? Thank
you so much.
>> [applause]
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