2 min read

Preparing for altered tiers.

In the movie Blackberry—highly recommend by the way—there is a scene that portrays a pivotal switch in the cell phone industry. An “a-ha” moment if you will. No, it’s not when the iPhone was unveiled, but when the industry figured out that it could not sell more time. During this era of the industry, consumers purchased plans based on the number of minutes they could use their device each month. In the early days, these plans were not cheap but competition drove the price-per-minute value down. To the point where the number of minutes included in top-tier plans was more than anyone could possibly use. For a while, they tried bundling multiple devices per plan and that lasted until they hit the same problem. Usage revenue was capped, but an entirely new category was building—data.

The Blackberry (as we knew it) is long gone but data usage remains the key factor in buying a cell phone plan today. I’m sure there are a few, but the number of minutes of “talk time” included per month doesn’t factor in at all. You and I can only talk so long, but we can download and upload bytes all day and night—even while we sleep. And then the industry splintered data revenue into three factors: how much per month, time of use, and speed. There’s no way the industry will stop here but find more subtle ways to dissect our use into ways they can charge a few cents more per unit. Thinking on this, I’m reminded of a scene in a pop culture movie that sums up the situation perfectly.

Currently, Adobe, Microsoft, Google, Salesforce, and others, so many others, rent their software through various bundles and options. Adobe, for instance, sells monthly or annual subscriptions to access core products with fringe services and applications. Today these plans offer unlimited use, but it would not surprise me to see new plans in the future that are capped by the number of hours available per month. You can almost see the screen print on the imaginary installation CD—“Get 100 hours of Adobe Photoshop for $5.99 per month!”—included in the latest plastic-wrapped issue of Communication Arts. Surely this is the topic of Zoom meetings all around the tech space between the folks from growth, revenue, and data because offering unlimited use will always eventually hit a wall, and we can only use so many applications at a time.

Now, enter a new dimension in pricing—AI. What data was to talking, AI is to data, but it will go past the simple equation of if you use it: yes or no. That’s already happening with AI upgrades on just about every SAAS product today. I see a time coming soon when there will be two price points for every SKU and it will cost more to block AI from training on your data (which is also happening right now). Or, worse, companies will simply force AI tools and training into their offerings with no alternative. No matter how this shakes out the costs are going to rise either monetarily or in human integrity.

Today AI is an upsell, but tomorrow it's going to be the “free, unlimited” option while working without it watching over your shoulder—so to speak—will cost more. This is the future SAAS companies are building towards and it’s hope is they don’t alter the deal any further, but I’m not holding my breath.