AI apps are like music
8 days ago
- #AI Pricing
- #User Experience
- #Product Strategy
- The article discusses the challenges of pricing in AI applications, particularly focusing on the 'model picker' issue.
- Cursor, an AI app, faces criticism for its pricing model where power users become less profitable, similar to Spotify's royalty costs.
- The author suggests removing the model picker to simplify user experience and align pricing with product performance.
- Spotify's strategy of managing margins by increasing prices, reducing costs, and negotiating with labels is highlighted as a parallel.
- Users generally don't care about the underlying models; they just want their work done efficiently.
- The article proposes solutions like routing queries to cheaper models, using open-source models, and developing proprietary models.
- Insurance and all-you-can-eat buffets are cited as examples of pricing strategies where low-cost users subsidize high-cost users.
- Key recommendation: Remove the model picker, improve product performance, and aim for pricing power through better distribution.