Tech vendors are facing profit erosion due to high AI deployment costs, prompting 52% to consider new pricing models. Usage-based pricing is emerging as a solution, with 54% of respondents expecting increased revenue by 2027, according to a Revenera survey of 501 product leaders.

With public cloud spend projected to quadruple in the next three years, tech providers are rethinking pricing structures to manage costs. Aligning with the surge in AI workloads, purpose-built infrastructure may be necessary. New pricing models are seen as crucial to boosting annual recurring revenue amid escalating cloud expenses.

Subscription models are losing ground to usage-based pricing in the AI market, with suppliers showing moderate adoption. Per-user subscriptions may not maximize revenue potential, as heavy AI users can quickly drive up costs. Struggling to align pricing with customer value, companies are urged to focus on enhancing user experiences and outcomes with AI.

Revenera’s senior director of product management, Paul Bland, highlights the challenges of aligning pricing with customer value, emphasizing the importance of good usage data. Only 36% of companies report strong alignment between pricing and customer value, indicating a need for better strategies to ensure AI delivers tangible benefits to customers.

Read more at Yahoo Finance: Tech vendors switch up pricing models to offset rising cloud costs