If you are running an AI service, whether large or small, one must address the nexus of the high compute costs and the expensive nature of providing such offerings. Companies like Microsoft and GitHub have responded to this challenge by introducing AI Copilot services at various price points, catering to consumer demand. The key question is whether consumers perceive AI as a mere productivity enhancement or an essential service.

Potential Revenue Growth and Pricing Model: Successfully portraying AI as indispensable opens the door to significant revenue growth. However, the current pricing model, relying on recurring revenue from flat-rate fees, may require reevaluation as adoption rates rise.

Indispensable Features of AI Services: To be considered indispensable, AI services must deliver the following key aspects:

•  Easy updating of factual knowledge.
•  Providing truthful outputs with proper and complete attribution.
•  Ensuring reliable control of dialogue.
•  Ensuring reliable control of social and ethical appropriateness.

Assuming the AI services can deliver the indispensable features outlined above, the industry is not there yet. A shift towards a per-usage payment model could become necessary to manage compute costs and maintain profitability.

Long-term success in the AI market will depend on striking the right balance between pricing, consumer perception, and service delivery.

Companies need to address the challenges posed by high compute costs while convincing consumers of AI’s essential role beyond mere productivity enhancement. Establishing AI services as indispensable is the challenge , the win = significant revenue growth.