Consumption-Based Billing Is Reshaping the AI Industry

Welcome to the Cloud Wars AI Minute — your AI news and commentary show. Each episode provides insights and perspectives on the AI revolution, exploring the technologies, companies, and leaders transforming business and reshaping the future.

In today’s Cloud Wars AI Minute, I break down the shift toward consumption-based billing and why rising AI usage and token costs are forcing vendors to rethink how they charge customers.

Highlights

00:13 — One of the topics that I wanted to talk about today is going to be specifically the shift toward consumption-based billing that you’re seeing across the AI industry, and this shift has really started to happen across the board.

00:34 — And what we’ll see is that we’ll continue to see more and more vendors move toward consumption-based billing, which will change the ecosystem definitely more than what you saw before.

01:03 — And as it went GA, it changed the way that licensing worked inside of Copilot Studio to be consumption-based. And so this is going to mean that authoring experiences and other things are actually starting to get consumption-based billing, and that’s really because of the price of tokens.

02:05 — I do anticipate that we will see this across the entire industry, and you even see things like Salesforce with flex credits and things like this starting to come in. OpenAI on July 6 had Workspace Agents shift to token-based credits.

02:36 — And a lot of this is that when we start looking at this, we see five to 30x percent burn increase as we start doing more and more than basic chatbot queries. We also saw a 98% per token cost increase in 2024. And so when you start looking at all of this, it’s just not sustainable to say here’s a flat fee and user base licenses in this world going forward.