Kyle Poyar

PostHog Disrupts AI Pricing with Simple Cost‑Plus Model

What's new in AI pricing: giving up on the idea of value-based pricing? PostHog just announced new AI pricing that's disruptive in a way that might upset pricing experts. They're not trying to tie pricing to outcomes. They're not charging based on seats. The model is simple: it's a pass-through of AI costs w/ a 20% markup. And every customers gets $20 of free usage to try it out. What's to like about this model: (a) it gives everyone access to AI features & lets them choose how they want to use them, (b) it feels fair -- it's pretty hard to argue w/ or negotiate against the model, and (c) it positions PostHog's value as *elsewhere* -- they have 10 other products they can monetize & AI can be used across all of them. I see this as a step toward a potential future direction* that might look something like this: 1. Customers choose between self-managed/BYO LLM and managed AI. Many folks are probably sitting on millions of $$ of unused AI tokens from OpenAI and Anthropic. Meanwhile they're getting overage bills from AI vendors in coding & other categories. Enterprises would (IMO) love to easily plug their unused credits into their favorite 3rd party tools. It would mean fewer AI vendors to manage, fewer tokens to predict & way less waste. The margins on managed AI would likely come down substantially (similar to PostHog's 20% markup) since this would be "competing" with BYO. 2. Vendors would monetize elsewhere, likely in more predictable subscription/SaaS models (although PostHog's products are all usage-based). This fits into how enterprise buyers traditionally like to pay for technology. And it forces vendors to clarify their value-add above & beyond the AI tokens (no room for AI wrappers). 3. This would open the door for 3rd party products to be sold *through* OpenAI & Anthropic, similar to the AWS marketplace model. If 3rd party products help sell more OpenAI tokens, why wouldn't you give OpenAI sellers quota relief on these products? And why wouldn't Google & Anthropic follow suit? Anecdotally, selling via the AWS marketplace can result in 60%+ faster procurement cycles. This could be win-win for the LLMs & the app vendors. --- What's exciting about this direction is that it would *simplify* buying, accelerate AI adoption & align incentives across the ecosystem. Although it does feel like we'd be going back-to-the-future. *I don't see this model applying to every product. It'll likely apply best to developer-focused tools and/or bigger platforms w/ a lot of AI usage. The folks who would be most insulated would be "service-as-a-software" players who deliver tangible work products/outcomes. #ai #aimonetization #pricing