AI and Pricing in 2023
Greetings and Happy New Year from all of us at Ibbaka. ?? In every fresh edition of Grok Value & Pricing, we delve into the current pricing and value landscape, addressing the most up-to-date trends and challenges facing professionals in this field. Subscribe today (and please share with your colleagues/friends/family who are interested in pricing, AI, and revenue growth) for the latest pricing and packaging focused insights and analyses.
NEW! Now Available to Download: Ibbaka's AI Monetization 2024 Research Report - a comprehensive exploration of AI investments and monetization strategies shaping the future of #B2BSaaS.
Over the past year, #AI has not only captured our imaginations but has seen rapid adoption and substantial investment. According to Goldman Sachs, AI-related investment is projected to grow, peaking at over 2% of GDP in the US, with an expected global investment of $200 billion by 2025.
?? Diving Deep into AI Monetization
Despite this surge, many B2B SaaS companies are yet to monetize their AI investments. A recent survey by us at Ibbaka delves into this crucial aspect, covering over 300 legitimate respondents across various SaaS verticals. The goal? Uncover insights into the types of AI investments, how they will be monetized, and potential differences across #SaaS sectors.
?? Types of AI Explored
The survey explores various AI approaches, including Expert Systems, Predictive Analytics using Machine Learning, Classification, Content Generation, Digital Twin, and more. Notably, content generation, fueled by #GenerativeAI, is in the spotlight. The report categorizes 3 approaches: leveraging third-party foundational models, using open-source models (like Meta's Llama), and developing custom models.
?? Embracing the AI Revolution
As we navigate the evolving landscape of AI, it's crucial to understand the diverse approaches and possibilities these technologies bring.
“If software is eating the world (Marc Andreessen in 2011) then AI is eating software.”
In November 2022 Open.ai released ChatGPT, changing how people understand and apply Artificial Intelligence, specifically Generative AI.
One result was a wave of investment in AI, with more than 70% of B2B SaaS companies saying they are investing in AI while only 15% are monetizing these investments (OpenView SaaS Benchmarks Report).
Generative AI is the use of Large Language Models (LLMs) and increasingly Small Language Models (SLMs) built using transformer architectures to generate content.
‘Generate content’ covers many possibilities. It goes well beyond generating text, images or video to include
One of the assets being generated is software code. AI has become a companion used by many developers to create, debug, analyze, and document code. This set of actions is spreading quickly beyond software code to all sorts of analytical tools. 2024 will see more and more people using generative AIs in different ways. Here is Google’s take on AI for code generation. And here is what is happening on GitHub.
Ibbaka uses this framework to help understand how an AI application is creating value and how to price that value.
Monetization of AI follows a strategic cascade beginning with the overall AI strategy, which guides the product strategy, and frames decisions on how to implement AI for a specific product.
Once one has developed an AI product strategy one needs to decide if one is trying to create a new category, disrupt an existing category, or sustain a position in an existing category.
These sets of decisions are critical to how AI-based innovations will get monetized.
Ibbaka has published a series of posts on AI Pricing that will help to guide you through this.
AI Pricing posts from Ibbaka
More than 70% of B2B SaaS companies are investing in AI but only 15% have begun to monetize. This is not sustainable. What questions should boards be asking about AI in 2024 planning?
Not everyone is using Open.ai’s GPT models. There are other alternatives. What are they? How are they priced?
AI Pricing: Early insights from the AI Monetization in 2024 research. Here are some early insights that are emerging: How people view AI, Level of Investment; Percentage of Revenues that will come from AI.
领英推荐
Not everyone is using Open.ai’s GPT models. There are other alternatives. What are they? How are they priced?
Digital twins have emerged as a key application of AI. How do these applications create value? How should they be packaged? How should they be priced?
Digital twins are a core technology for transforming manufacturing. Ibbaka interviewed Stefano Butti , CEO of our client Servitly on his vision for digital twins and the impact they can have on manufacturing.
ChatGPT was launched less than one year ago but it is already upending SaaS product architectures. Initially, we saw many generative AI extensions but we are now seeing the AI as the platform. How will this impact pricing?
Open.ai’s ChatGPT has become one of the anchor points for Generative AI pricing. How are people responding to the current pricing? What should Open.ai do next?
Copilot for Microsoft 365 pricing has been out for a few weeks now. Some buyers seem to have locked onto this as a reference price for any generative AI product. How should people marketing and pricing generative AI solutions position themselves relative to or away from Copilot?
Figma a is a key application for software applications, apps, and website designers. It has recently introduced Figma AI. How is this priced compared to the other packages?
The results are in for our survey on price acceptance of generative AI productivity applications. See how much people are willing to pay.
Microsoft put a price on the AI option for Microsoft 365. US$30 per user per month for Copilot. This has triggered much comment and discussion. And it sent Microsoft’s share price up. We look at the reaction to this pricing and invite you to share your thoughts.
Cohere offers an alternative Large Language Model and has a nice, clear pricing page. Let’s look at what Cohere’s pricing says about their offer and compare it with Open.ai’s published pricing for GPT.
We are being swamped by generative AI content. This is one of the early use cases for generative AI and both large, well-established, companies and start-ups like Jasper and Copy.ai are jumping in. Let’s look at how companies are innovating in this space and capturing the value of their innovations.
If software is eating the world (Mark Andreessen) then Artificial Intelligence is eating software. AI has come of age and over the past few years, we have seen a blossoming of real-world applications. There is still a lot of confusion about how to price and monetize this innovation. Ibbaka proposes a general framework for pricing AI.
Chat GPT from Open AI has been getting a lot of attention recently. It is a window into the future of AI and how we will work with AIs. Ibbaka asked Chat GPT about pricing and product-led growth. See what an AI has to say.
In the summer of 2022, long years of work on AI content generation exploded into the mainstream. In 2023, billions of images will likely be produced by systems like Dall-E and Stable Diffusion. How will AI content generation deliver value? Is this category creation or disruptive innovation? How will these systems and the images they generate be priced? The 3rd part in Ibbaka’s series on Pricing and Innovation.
Many companies are adding predictive analytics capabilities to their offers. We all want to know more about the future, there is more and more data available, and deep learning-style AIs have been described as prediction machines. How should this new functionality be priced? There is no one answer, but by following the basic value-based pricing process one can get to an answer.
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(This originally was published on Ibbaka's Value Pricing Blog)
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