Kyle Poyar and Palle Broe - How AI apps make money - May 2024
FreeThe state of AI pricing at 40 leading startups
FreeFree tier
About Kyle Poyar and Palle Broe - How AI apps make money - May 2024
A detailed analysis by pricing expert Kyle Poyar and monetization strategist Palle Broe examining how 40 leading AI-native startups (including ElevenLabs, EvenUp, and Jasper) are pricing their products. Based on publicly available data, the article reveals five key trends: limited pricing innovation (70% use subscriptions), user-based charging (AI as copilot rather than worker), heavy use of free plans (50% offer free tier, 20% offer trial), good-better-best packaging, and varying pricing transparency (two-thirds public). The analysis covers marketing, productivity, vertical-specific, and other AI apps, providing actionable insights for founders, product managers, and investors.
Key Features
Analysis of pricing models across 40 AI-native applications
Five key findings: limited innovation, user-based pricing, free version popularity, good-better-best packaging, varying transparency
Comparison of value metrics, packaging tiers, and free versions
Covers marketing tools (Jasper, Copy.ai), productivity apps (Tome, Glean), vertical-specific (Harvey, Co:Helm), and others (Synthesia, HeyGen)
Focus on AI-native apps unconstrained by legacy pricing
Public data from Forbes AI 50 and Sequoia Generative AI market map
Pros & Cons
Pros
- Data-driven analysis based on 40 real AI startups
- Actionable insights for pricing and packaging decisions
- Clear presentation of trends with supporting data
- Free preview available with option to read full post
- Authors are recognized experts in growth and monetization
Cons
- Only covers publicly available pricing information
- Excludes incumbent AI providers with legacy pricing
- Snapshot as of May 2024; pricing models evolve rapidly
- Focuses on application layer; does not cover infrastructure or model providers
Best For
Startup founders evaluating AI monetization strategiesProduct managers designing AI pricing and packagingInvestors assessing AI market trendsPricing experts benchmarking against leading AI companiesStudents and researchers studying AI business models
FAQ
What pricing models do most AI apps use?
The analysis found 70% of leading AI-native apps use a subscription model, with very few offering pure usage-based or pay-as-you-go pricing.
How common are free versions among AI apps?
Half of the 40 companies analyzed offer a free plan, and another 20% offer a free trial, making free versions extremely popular for initial adoption.
What is the typical packaging for AI apps?
Most AI apps follow a 'Good-Better-Best' paradigm in terms of packages and tiers.
Are AI apps transparent about pricing?
Two-thirds of the analyzed companies have public pricing on their websites, while one-third do not show pricing publicly.
Who are the authors and what is their expertise?
Kyle Poyar runs Growth Unhinged, a newsletter on hidden growth playbooks; Palle Broe is Director of Monetization Strategy at Templafy, early Uber employee, and author of the Rule of Thumb newsletter.