AI Sticker Shock
The major AI companies have recently raised user prices significantly. Will that impact how much businesses use them?
Companies have committed tens of millions of dollars, or more, to install the hardware and software needed just to run AI. Now they may have to set aside millions more to use it.
Over the past few months, many AI creators announced that they are moving away from a flat-fee pricing model to charging for each use. The new model has been rolling out over the last few weeks and, to the surprise of many firms, raised the price of using AI-powered tools significantly. Pricing for some software subscriptions jumped between 20-40% instantly. Other plans, which once allowed for unlimited AI use, now have hard limits, forcing firms to buy more credits, akin to having to buy more minutes for a cellphone plan. “The changes are getting people’s attention,” says Bryan Ackermann, Korn Ferry’s head of AI strategy and transformation.
Internet message boards are already filled with complaints about the changes. One user claims he burned through half of his monthly AI credits in a single prompt. Another said they used up their monthly credits in five hours. One company burnt through the money it had allocated to AI for all of 2026 by mid-May. On the corporate side, firms are feeling the heat from investor groups, with stakeholders wondering when they will see a ROI from the billions invested in the technology. Higher prices only turn up the heat from investors.
The organizations most impacted by the price changes are early AI adopters, particularly software firms. For the last couple of years, using AI was actually pretty cheap. The AI creators, while spending billions of dollars themselves to build and support AI models, weren’t charging organizations very much to quickly use the tools. Now AI creators are charging higher fees to cover their own costs, and it’s changing the math for companies that already installed AI agents. Ackermann said one CFO told him that, after the price changes, the cost of an AI workflow the CFO’s firm implemented was more expensive than the human labor it replaced.
Experts say the price changes likely won’t stop companies from adopting AI, as its potential to make systems faster, better and cheaper are too great to ignore. The AI pricing changes remind some experts of what has happened in other tech upgrade cycles. At one point, website hosting and cloud computing were heavily subsidized to get people and firms to use the services. Gradually those customers had to pay more as those web hosting and cloud-computing companies passed a larger percentage of their own costs along. The price increases didn’t deter many firms from using those services.
However, the AI price changes may change how fast leaders push employees to use AI. Until recently, some firms used leaderboards or other incentive plans to encourage rapid AI adoption. Now many of those firms are dialing those programs back. Firms still believe AI can improve productivity over the long-term, but the new pricing likely means that unfiltered use could make those gains harder to achieve. “It’s easy to be mindless in your use of AI, but that’s exactly what firms don’t want,” says Matt Bohn, a senior client partner in Korn Ferry’s technology practice.
Company finance leaders also might start asking themselves how advanced an AI model do they really need. The priciest AI models will often be the ones that are most advanced, but as those are introduced, it could lower the cost of existing products.
Learn more about Korn Ferry’s AI in the Workplace capabilities.
