If you love pricing, I’m sorry for you. It means you’re a nerd like me, someone who’s fascinated with the ripple effects of tiny, but fundamental decisions. It means you have to live with the knowledge that nobody in real life cares about your little niche interests.
Luckily, this is the CommandBlogue, where we can both geek out together and know we’re not alone with our weird obsessions. James recently published an article about how we priced our AI SaaS product (Copilot). But one company’s answers don’t have to be true for everyone#, especially if it’s been less than a year.
That’s why I wanted to know more. That’s why I looked for some YC founders building AI products. Over the past weeks, I spoke with the founders of Kraftful, Ellipsis and Infer about AI pricing—how they think about it, which model they ended up with and which other models they considered.
Want to know how YC startups think about AI pricing? Keep reading! If you’re familiar with the unique challenges of pricing AI products, feel free to jump to the examples on the left sidebar. If you want a quick primer, I’ve excerpted James’s AI SaaS pricing article below:
“Traditional SaaS pricing grants (more or less) access for a fixed fee with similarly stable costs. But paid-by-the-token APIs, we could get a difficult scenario: Power users taking the “unlimited” too literally and bankrupting you.
In nerdspeak: AI apps have COGS.
This has spawned much social media chatter in the SaaS community. Should you pay based on usage? Should users foot their own AI bill?”
When each user interaction costs you money, pricing gets trickier. This has led to a lot of discourse on the evolution of pricing in the future. And since startups are the future, who better to tell us all about it than Y Combinator founders? Let’s dive in!
If you’re a product person, you probably love the strategic work, but hate spending hours reading survey results until they look like hieroglyphs. Kraftful (YC S19) aims to fix this.
Kraftful is an AI product that takes all the text inputs you deal with and analyzes them with AI. You’ve probably spent countless hours sifting through support tickets, user feedback and other text. Kraftful saves you those hours if you connect one of 30+ feedback sources.
This puts Kraftful into a potentially difficult spot: Some companies have orders of magnitude more feedback to analyze than others (Think of B2C vs. B2B—Consumers share so much more input in public). This means the cost for different customers also varies.
The pricing itself is what James defined as a usage-based subscription: Kraftful customers pay a monthly or yearly fee. This gives them unlimited access to some features and lets them AI-analyze a limited word count. In effect, you buy a certain amount of credits each month, similar to a phone plan that costs $15 each month and includes a certain amount of data.
Those hours are what CEO and founder Yana Welinder anchored to when I asked her about Kraftful’s pricing strategy:
“We base our pricing on word count to transparently reflect the time savings our solution provides. For instance, our Team plan saves 1,261 hours of manual review, demonstrating to customers that the cost of using Kraftful is more than 25X lower than manual labor. This clear value translation helps customers understand the financial benefits instantly.”