Run the Numbers
00:02:53 · CJ Gustafson, Ali Hussain
[00:02:53] S0: I think me and you are around the same age. Do you remember when Uber and Lyft first came out and were widely available? [00:02:58] S1: When I first moved to New York, CJ, Uber had a $3.99 pass, some small fee a month, and any ride outside of the airport is $3.99, and I used the heck out of it. It was basically for a buck 50 or $2 more than a train, I could go anywhere. And even for the airport, for those listening, you just go to National or Avis, and it's $3.99. And you just get on the bus and you go there. And it was a it was a wild time. I think that's what you're talking about. [00:03:26] S0: So in 2012, I remember during the winter of the scene... My senior year in college, there was a cab stand that was really far away, and I was going to school in Boston. It was like 12 degrees, and it was a revelation that we could call to go to the bars on our phone and it would come and pick us up and it blew our minds as college kids who barely had enough for beer money that we could get all the way to, I think we were going to like Brighton for $12 but if we took the cab where we had to stand in the cold, it's going to be 25 to $30. And I bring all of this up because that is the last time period I remember where things were so heavily subsidized by the VCs. And I feel like there are many analogs and parallels to where we are now with the cost we're seeing Because if you get a bill from Anthropic for $60,000, I bet you dollars to donuts, it's actually closer to a 150 or $200,000 of actual services you're getting.
00:04:20 · Ali Hussain
[00:04:20] S1: 100%. And, like, and for us, most of us are thinking about this just as the Anthropic bill or the OpenAI bill, but there are probably 30 other tools you buy that still feel like the past. They're a seat. They're a flat fee. They're a onetime product. Have been building AI on top, and most of them have been absorbing that cost. And this year has been really the changing moment where I think that drastically shifts, and we're seeing it in our Tabs data. This time last year, less than 10% of our users were passing on tokens or AI cost to their customer. As of August of this year, in 2026, we're at 33%. And by end of year, just based on the trajectory, we think it's gonna be more than half. And so something has already started to shift, and the folks who, like you and me, were paying $3.99 for Uber, they're now about to maybe transition to Uber share or x costs. And it's still being subsidized in that Uber Black type framework, but it's about to get a little bit more real.
00:05:28 · CJ Gustafson
[00:05:28] S0: Well, then I remember, you know, I'm working for PWC a couple years later, and I'm flying around the country a lot. I would get out at the airport, and it actually came to a point where I started to just wait in the cab line because it became more expensive to take an Uber. So you're saying companies are passing this through. This is gonna come across as a dumb question, but isn't there supply and demand here? Like, how are companies getting away with that? Are... If they pass it on, are are buyers just gonna go to the cheapest vendor if if some of this inference becomes a commodity?
00:06:00 · Ali Hussain, CJ Gustafson
[00:06:00] S1: I think at the actual inference level, for sure, like, we're gonna see some of that, and I think we're already seeing it. Like, some of my most clod heavy users are now moving back to Codex, or my favorite one, like, we wanna call yesterday where someone just said, look. You know what? Gemini is good enough, and I bundle it with my g Suite, and it's the cheapest. On the other hand, though, when it comes to specific tooling, whether it's around how you do legal or how you do marketing, there's still a huge opportunity for some of the best vendors out there to make their products better through tokens or inference, but then provide service on top that you must still buy. I just think the way you've bought them in the past, like software and seats, must evolve, because they are fueling that with real inference costs. And it's not sustainable for them to shield that cogs, as they've gone 70, 80% gross margins to a... Like we've heard, there are many right now sitting at negative 20 to negative 50% gross margins. I just sustainable. And so I don't think that's a commodity. I think you'll still need it from these providers, but they're gonna have to... It's not that their costs are just gonna go down. They're gonna have to figure out a way to pass that through, and we're certainly seeing a huge surge in that this year. [00:07:17] S0: With that context, I do wanna touch on the pricing and packaging. What are the most common flavors you're seeing companies sell their products in?
00:07:26 · Ali Hussain
[00:07:26] S1: I think the most interesting thing this year has been everyone assumes these are like AI natives that are passing on AI costs. The biggest growth we've seen here is the legacy companies, late stage, growth backed SaaS companies, private equity owned services. And so the reason I bring that context up is the pass on of these costs, if you're listening today, is not a nice to have. If you're not already feeling it, this is an inevitable thing that is coming across your door very soon. It's either because you have new products coming that have these costs in them, you're or get a lot of pressure at the board level. If you don't have a variable model, even if you have an AI product, you will not get credit for it from an investor, and the street will just price it as a seed based product. Now with that context in mind, the most common thing we're seeing right now is some form of hybrid model. What I'll tell you is debt is the old way of doing this, which is simple price times quantity. Those days are gone, and that is a very consumer oriented way of thinking about it. I think what we're seeing is some form of hybrid model, in which the company providing the service or the vendor is getting their customer comfortable to commit to some type of bundle. What's great about that is you're still getting the certainty of a certain amount of economics upfront, and you're also giving your customer certainty on how much they are buying so they can plan and budget for it. The second is that bundle or that commit allows you to not lean in one direction too hard in how the product and service is bought. And so we're seeing multi product within that bundle. And so there's a distribution across, I wanna buy seats. I wanna buy platform, but I also wanna buy agents. I wanna buy token pass throughs. And all of that is starting to show up as a part of that bundle. And so my view is the bundle is most in vogue right now, but is very much hybrid, and it is coming in the form of some type of commitment.
00:09:31 · CJ Gustafson, Ali Hussain
[00:09:31] S0: What are you seeing in terms of tiers? Because tiers sometimes get confused as, oh, it's kind of like a subscription price, but, like, within a range, you're gonna pay the same thing, but it's also a commitment model. Where where is this? There's an overlap between them, or is it just pure commitment based pricing? [00:09:46] S1: I think tiers is probably what I would say is the second most common. I think I saw a lot more tiers in the early days, and a lot of it was people just had a hard time administrating the burn down, and so a tear was just a easier way to bump people up and down. I am now, with the level of tooling we have certainly with products like Tabs, I think people are able to evolve from it. And I think people just want to grab as much of the top tier as possible. The customer doesn't like just getting bumped up and bumped down in tiers. And often, tiers have a huge delay between when you jump, are you there permanently, and they just become a little bit more difficult to administer in terms of the customer relationship. I've just been amazed by how accelerated the commitment model has become in all parts of the economy. [00:10:34] S0: Something I've seen in 2026 is the proliferation of this mystical creature called a credit, but I've also realized that a credit is not a credit is not a credit, depending on what you're talking about. What are you seeing?