Ask your questions on generative AI monetization
Steven Forth is CEO of Ibbaka. See his Skill Profile on Ibbaka Talio.
Some of the second generation generative AI applications that Ibbaka is tracking are:
Totogi - AI enabled configuration for a BSS
AiSDR - AI sales development reps
Synthetic Users - amplify user testing with generative AI
Harvey. - generative AI for legal
Glean - enterprise AI for company data
Sakana.ai - the digital scientist
One of the big trends in generative AI is the move to vertical applications. In its State of the Cloud 2024 Bessemer Venture Partners called out Five Trends shaping AI.
Note trend 4. “Vertical AI shows potential to dwarf legacy SaaS with new applications and business models. It is these new applications and business models that we will be talking about in the roundtable.
Ibbaka believes that generative AI applications have unique and emergent properties that will require a new approach to pricing. You may not agree. You can tell us that in the survey. But take a moment to listen to our position. We will be testing it with Kyle and Michael in the roundtable.
Generative pricing responds to four emergent properties of generative AI applications. These applications are composable, conversational, integrative and synthetic.
To price applications with these properties we will need a process that is responsive, explainable and value-based.
Responsive Pricing
Pricing should adapt quickly to application configurations, which change as needs evolve.
Differs from dynamic pricing, which adjusts based on external factors like market demand and supply.
Responsive pricing changes with the product configuration, reflecting the customer's evolving needs.
Systems must generate quotes as quickly as configurations change.
Explainable Pricing
Pricing optimization engines are often seen as "black boxes" that lack transparency.
There is progress in explainable AI, which helps justify pricing decisions.
Chatbots should be prepared to answer questions about pricing, such as how prices are determined and whether they reflect value.
Value Based Pricing
Recognized as an effective pricing strategy for decades but challenging to implement.
Often confused with willingness to pay.
Generative pricing will require value-based pricing, driven by the composable nature of AI applications.
Optimal configurations should balance value optimization for buyers and cost minimization for sellers.
Value models will become more dynamic, with AI facilitating conversations to uncover and quantify value during the buying process.
The pricing process that delivers this is generative pricing.
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