Never Show Customers Your Underpants (A Guide to AI Pricing)

Are you making the #1 mistake in AI pricing? Many founders are using their old SaaS pricing model, but for AI, that’s a huge error. As pricing expert Dan Balcauski explains, it’s like showing customers your “underpants”, and it’s killing your sales. In this guide to AI pricing, Dan breaks down why the game has changed. Unlike traditional SaaS, AI products have significant variable costs and unpredictable customer value, creating a new set of challenges for founders. We explore the psychology of value-based pricing, how to choose the right pricing metric, and the strategies companies like Google and OpenAI are using to price their AI tools. Check out the company: https://www.producttranquility.com----------------------------------------------------------------------------------------------------------------------------📚 NETWORK BEFORE YOU NEED IT (6 LESSONS THAT MADE SEAN $15M)----------------------------------------------------------------------------------------------------------------------------▶ Get my eBook free - https://welivetobuild.com/network-----------------------------------📈 WORK WITH ME-----------------------------------▶ Buy 300 Lessons From 300 Founders: https://welivetobuild.com/300-lessons-ebook▶ Book a Paid Advisory Session: https://welivetobuild.com/book-a-call▶ Startup Fundraising: https://welivetobuild.com/fundraising▶ Sponsor the Channel: https://www.welivetobuild.com/sponsorship---------------------------------------------👀 CONNECT WITH SEAN---------------------------------------------▶ LinkedIn: https://linkedin.com/in/seanweisbrot▶ Inquiries: [email protected]🕒 CHAPTERS---------------------------00:00 - Why Your SaaS Pricing Model is Obsolete02:05 - The Value vs. Cost Dilemma of AI03:20 - Foundation Models vs. AI Applications07:15 - Why AI Product Prices Are So Inconsistent11:15 - The Power of Long-Tail Distributions in Pricing17:05 - The Problem with Capped "Unlimited" Plans19:10 - Why AI Companies Are Hardware Constrained24:30 - The 2 Axes of a Smart AI Pricing Strategy28:00 - The #1 AI Pricing Mistake: Showing Your "Underpants"31:30 - The Psychology of Value-Based PricingLeave a Review (it truly helps us grow): https://welivetobuild.com/review Hosted on Acast. See acast.com/privacy for more information.