Why is it so hard to make money from selling the most important inventions of our times? Just like back in the dot-com bubble at the turn of the century, AI certainly isn’t lacking in general awareness. Nor in the amount of money investors are pouring into the infrastructure and R&D to make something amazing out of it.

Despite this - or thanks to all that fuzz, we hardly hear stories of someone launching a paid AI related subscription product and then seeing it turn into a profitable business. I’m not talking about the raw APIs to run LLMs in the cloud (which are dropping in cost and still not run at a loss). I mean a product built on top of the models. Something like a SaaS subscription at $49,99 a month, aimed at individuals and non-software businesses.

It seems quite difficult for tech vendors to design a product and set a price point that they can confidently stick to. Let’s look at the two parties that are closest to the theme of this newsletter: OpenAI and Microsoft.

OpenAI: fake it ‘til you make a profit

In December 2024, OpenAI introduced the ChatGPT Pro subscription. With its 10x monthly price compared to ChatGPT Plus, I called it as primarily “a way for the AI fanatics to signal that they’re “true believers” in the business benefits that ChatGPT can deliver them”. That was my reaction based on the post I saw on social media from people defending the $200 price point.

Now, after one month, it’s time for the first subscription renewal. One-off payment of $200 ain’t that much for tech geeks and AI enthusiastic business folks. But $2400/year is a bigger deal. Instead of the initial excitement of “ooh, shiny new toys for me!” you’re faced with the less thrilling question to ask yourself: “did I really use this toy enough to justify paying for it every month?”

Many eager users who wanted to try out the Pro plan are likely to choose to cancel it for now. Given how there doesn’t seem to be any clear drawback from putting things on hold if you don’t have time to use it, your ChatGPT subscription becomes just like a Netflix subscription. You have the option to reactivate if you really need to see that show / use that model.

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