If you are building an AI product, every user interaction costs you real money. This changes everything about how you set prices. Know your costs before you set a single price point.
Traditional software costs almost nothing to serve an additional user. The server is already running. One more person barely changes the bill. That is why traditional software companies have 80-90% margins at scale.
AI products are fundamentally different. Every conversation, every generation, every voice command costs real API money. You are running a restaurant, not a library — every meal costs you ingredients.
Traditional software is selling ebooks — each copy costs you nearly nothing. AI software is running a restaurant — every plate costs you ingredients, every cocktail costs you liquor. You need to know your food cost before you price the menu.
First question: what is your product's unit? For a voice AI product, it might be one minute of conversation. For an image generator, one generation. Define the unit clearly because everything else builds on it.
| Component | Cost Per Minute | % of Total |
|---|---|---|
| Primary AI API | ~$0.08 | ~80% |
| Secondary AI API | ~$0.015 | ~15% |
| Database Read/Write | ~$0.005 | ~4.5% |
| Total Cost Per Minute | ~$0.10 |
Use real data from your actual product, not estimates. Estimates are always too optimistic.
Stay the same whether you have 1 user or 10,000. Database hosting ($25/mo), website builder ($30/mo), app developer accounts ($100-200/yr), domain name. You pay these regardless.
Grow with every user interaction. AI API calls per session, LLM processing per request, payment processing per transaction. More users = more cost.
Three to four tiers: free (try it), mid-range (regular use), premium (heavy use). Frame limits positively — "120 minutes of practice every month" not "limited to 120 minutes."
Website reflects actual costs plus margin. App adds Apple/Google tax on top. Be transparent — users appreciate honesty and the law allows you to mention the cheaper option.
15-30% discount. Reduces churn (users commit for a year) and gives cash upfront. Offer on your website where you keep the full amount — no Apple/Google cut.
Never offer unlimited usage on an AI product. "Unlimited" means one heavy user can cost you more than they pay. Your marginal cost is real.
Ask Claude to build a pricing model spreadsheet. Feed in your API costs per unit and the tiers you are considering. Calculate margin at 50%, 70%, and 100% utilization. The spreadsheet becomes a living document you update as costs change.