AI Pricing: Market acceptance of ChatGPT Pro pricing
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talio.
The PeakSpan/Ibbaka survey results on Net Revenue Retention | State of the Industry - High Performers VS The Rest are now available to download.
It has been several months since Open.ai announced the paid service for ChatGPT. The original pricing was US$20 per person per month. Ibbaka commented on this pricing back in February of this year in What pricing metric for ChatGPT Plus.
A half year has passed. Open.ai has refined its approach a bit, offering discounts for time commitments, but it is holding at the US$20 mark for a monthly subscription.
Some have suggested that the generous discounts for a three month commitment (1/3 off) or an annual subscription (60%) off reflect a churn problem. Others have said that given that ChatGPT is defining a new category it wants to make sure that people stick around long enough to find ways to get value from it.
Are people getting value from ChatGPT?
Is the US$20 per month price point a barrier?
We reached out to our network on LinkedIn and asked the following.
Many people are using ChatGPT in their work.
How are you using it?
Are you paying for the US$20 per month version?
Do you have a paid subscription to ChatGPT?
Yes
No - Too expensive
No - Would not use
No - Considering
This poll was posted to the Design Thinking Group, the Professional Pricing Society Group and Steven Forth’s personal feed on August 22 and 23 and received 1,844 responses.
I was surprised by how many people say they are paying for ChatGPT Pro (almost 23%) and how few (less than 20%) said they were not interested in using ChatGPT. A fairly large group are on the fence (just over 34%). Looking at this, admittedly biased sample, the impression is that Open.ai got the initial price about right.
A number of people questioned whether there was enough difference between the Free Version and the Pro version to justify the price and several people who currently subscribe to Pro said that they were not getting enough additional value, above the free version, for the money they were spending.
The differences between the two offers seem compelling to many, but not all.
Some people volunteered comments on how they are using ChatGPT.
Using the free ChatGPT for the moment. Its saving me a bunch of time wordsmithing. Whereas before, I would spend time rewriting 'content' (Any of its permutations in a strategic design context) I'll write to a point where I find I'm starting to tweak small things in the content, I'll throw it to GPT to suggest improvements from x perspective, or for an audience of y. I'd say >70% of the time, I'm incorporating its suggestions in some way, shape or form.
Code generator alone is worth $20. It's not just for coding or data visualization. It can do some amazing things with text if you structure your prompts and us CoT prompting.
At this point I am going to cancel the paid version after using it from day 1. Even with the paid version it defaults me to the free 3.5 and the results are not much different.
The results are not significantly different, but the plugins and the built-in instructions are helpful for me. If not for those features, I could get by on 3.5 too.
Once we recognize ChatGPT and AI as additional time-saving tools in our toolbelt, the possibilities are endless. I use ChatGPT on a daily basis--not just to generate content ideas, but to help me organize my thoughts, as a more enhanced search engine to help me walk through setting up reporting dashboards or campaigns, creating outlines for decks so that I don't miss key pieces I need to include, etc. It's a highly useful tool!
- I use it as a sounding board on pricing ideas
- I use it to write internal documentation on new pricing models and product launches with just an info dump and my company's brand voice instructions
- I use perplexity.ai for research when it comes to supporting statistics
- I use it to develop buyer personas globally, especially in markets I need to become more familiar with
- As a way of brainstorming out-of-the-box ideas (utilizing mental models like first principles, 6 thinking hats, etc...), and much more!! Well worth the $20/month!!
Yea, it’s worth it. I use it for creating customer avatars. And, I’ve also used it to create some smoothie recipes catered to support neuochemicals.
ChatGPT Pro provides one of two well framing prices for general AI, the other being Microsoft 365 Copilot at US$30 per month.
We discussed this in AI Pricing: Has Microsoft Copilot set a reference price for other Generative AI Applications?
General use AI applications are still at the very beginning of their innovation curve. There are many new configurations for the transformer architecture to be explores, new ways to build models, new data to build from and hyperparameters to develop and tune. There is a lot of innovation to come.
With these innovations, will come new ways to imagine pricing, and new ways to price.
