Consumption-Based Pricing in the AI Era

This IDC Market Perspective explores best practices, key hurdles, and strategies to help businesses implement consumption-based pricing (CBP) effectively in the AI era. Consumption-based pricing is becoming essential in the AI era, offering flexibility and cost control. This model aligns spending with actual usage, optimizing budgets and reducing waste. The shift to CBP reflects a broader transformation in digital business models, driven by the need for scalable, efficient AI adoption. While traditional subscription models persist, hybrid approaches combining fixed and usage-based elements are emerging. Successful CBP implementation requires clear metrics, executive support, and pilot testing. Companies that treat pricing as a strategic function and leverage advanced analytics will maintain a competitive edge."As AI and digital services continue to grow, consumption-based pricing is gaining momentum as enterprises seek greater flexibility and control over their costs and revenue. This shift places pricing teams at the center of monetization strategy, making their role more critical than ever. Organizations that view pricing as a business-critical function - and invest in the necessary resources, leadership support, and advanced analytics - will be the ones that successfully scale consumption-based pricing and maintain a competitive edge," says Tiffany McCormick, research director, Digital Business Models and Monetization at IDC.