Augment Code recently switched from per seat pricing to an opaque token based pricing scheme. I immediately canceled when my bill went up 1000%. Check out their reddit to see what other customers are saying. https://www.reddit.com/r/AugmentCodeAI/ A prominent AI blogger has predicted their company will fail within 18 months due to this change. I do believe they got taken to the cleaners by people using their system in agentic mode whereas I was an agentive type user.
I am surprised how little credit Midjourney gets for actually seeing "the pricing model collapse no one saw coming."
They had usage-based pricing (almost?) from the outset, and they dropped the free tier altogether more than two years ago.
Surprise, surprise! They seem to be profitable!
We will probably look at usage-based pricing as the dominant pricing option. It simply moves consideration of how much value is delivered to the end-buyer. For everyone else, it's just renting the infrastructure (hardware, models, software, etc.).
And when you think about it, it's nothing new. It's basically how AWS has operated for 2 decades. As much as with modern AI tools, we actually can't know precisely what's going to be on our AWS bill. So it's not that much of a revolution anyway.
For decades, we've assumed that we can have a fairly decent version of a product for free. It worked because the marginal cost of adding another free user was negligible. With AI-intensive features, it's not true anymore.
So either free versions will be borderline useless (think Lovable) or entirely non-existent (think Supercut).
Augment Code recently switched from per seat pricing to an opaque token based pricing scheme. I immediately canceled when my bill went up 1000%. Check out their reddit to see what other customers are saying. https://www.reddit.com/r/AugmentCodeAI/ A prominent AI blogger has predicted their company will fail within 18 months due to this change. I do believe they got taken to the cleaners by people using their system in agentic mode whereas I was an agentive type user.
This could destroy a $280M VC investment.
😬😳
I am surprised how little credit Midjourney gets for actually seeing "the pricing model collapse no one saw coming."
They had usage-based pricing (almost?) from the outset, and they dropped the free tier altogether more than two years ago.
Surprise, surprise! They seem to be profitable!
We will probably look at usage-based pricing as the dominant pricing option. It simply moves consideration of how much value is delivered to the end-buyer. For everyone else, it's just renting the infrastructure (hardware, models, software, etc.).
And when you think about it, it's nothing new. It's basically how AWS has operated for 2 decades. As much as with modern AI tools, we actually can't know precisely what's going to be on our AWS bill. So it's not that much of a revolution anyway.
Another interesting thing is the dusk of a free plan: https://pawelbrodzinski.substack.com/p/basic-paid-plan-is-the-new-free
For decades, we've assumed that we can have a fairly decent version of a product for free. It worked because the marginal cost of adding another free user was negligible. With AI-intensive features, it's not true anymore.
So either free versions will be borderline useless (think Lovable) or entirely non-existent (think Supercut).
interestingly: sponsored by Attio, who uses flat per-seat pricing :)