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Business

Caroline Nihill

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Every IT professional knows the absolute dream: to be invited to yet another meeting.

But a pricing meeting isn’t your typical corporate get-together; it comes once the company is ready to release a product or service that the team has spent months, maybe even years, building. Those who built the product must now help determine its value…and its price.

Some executives would prefer if IT professionals weren’t in the room for those kinds of conversations.

“Whoever is working in a company, I wouldn’t worry about [ pricing]. I hate to say it this way, but it’s not in their pay grade,” Arjun Pillai, the co-founder and CEO of AI platform Docket, said. “It’s just too much variable for them to worry about. The people who are heading the company, those are the people who should worry about it.”

But other experts, like Guy Marion, chief marketing officer at Chargebee, and Wade Foster, CEO and co-founder of Zapier, believe that assigning value to a product is a cross-company exercise.

“Pricing and packaging is a multi-disciplinary effort,” Foster said. “You’re trying to figure out what is the best way to deliver value to customers…I tend to find that you want anyone who has a good point of view on those things at the table.”

Historically, a company’s finance teams and CFO have been widely seen as responsible for determining pricing for a new product or service.

But as technology such as AI becomes more complex, according to Marion, there’s a rising desire within businesses to involve technical staff and others in pricing meetings.

“We’re seeing the rise of the empowered RevOps, the empowered CIO, the empowered IT leader who thinks about pricing as a product,” Marion said. “When you think about pricing as a product, you think very differently. You need to build in agility. You need to have the ability to automate everything to begin with.”

Against the backdrop of these changes, Marion said Chargebee recently created an internal SVP of corporate IT role, which oversees the interplay between finance, billing, CRM, taxation, and other software.

While Chargebee wants IT in the room to the very end of a release cycle, Foster said that sometimes those conversations are above an IT professional’s pay grade.

In deciding who should be at the table for a pricing conversation, Foster said that he likes to put aside titles and instead focus on skills and tasks required. If there isn’t an understanding of the cost to deliver a product, “you’re going to end up losing money per every transaction you have, and that’s a problem,” he said.

“You want your folks in your organization to have good instincts on: What are the customer problems? How does the customer value these things?…Generally, that requires a well-rounded perspective,” Foster said.

If IT is bringing perspectives that the company needs, they should “unequivocally have a seat at the table,” he said.

Talking finance: Should software developers help price the product they build?

“If IT is bringing some of that perspective, they should unequivocally have a seat at the table,” Zapier CEO Wade Foster says. 

While it can seem as if artificial intelligence (AI) has all the answers, especially when given the right prompt, many providers are finding it difficult to find the right pricing models for their AI products in a rapidly evolving landscape.

Guy Marion, the chief marketing officer at Chargebee, a commerce platform for subscription and recurring revenue businesses, told IT Brew that companies building and iterating the latest AI products are experiencing market changes as much as every six months.

“The industry is moving at a faster pace than we’ve ever seen before, and the markets are bigger than they used to be,” Marion added.

In response, Marion said that some companies are choosing to charge customers on a subscription basis for using AI tools and services. While it could seem as if such fast industry development promotes competition and choice within the market, some see it as burdensome for consumers.

, reported that companies that combine subscription, usage, and outcome models (or the issuance of a flat fee) doubled their probability for increased profit margins in comparison to those with just a usage-based model.

Given how much people are talking about AI, it’s sometimes easy to forget the newness of the technology and how rapidly it’s evolving. Even the big AI providers are trying to figure out…well, virtually everything about how to build and market AI products.

Michael Friedman, the SVP of customer experience AI-provider ASAPP, said that the easiest part of setting the price for an AI solution is talking to customers about the value of the model. But thanks to the AI industry’s constant change, it’s much harder to measure your product’s value against market competitors.

“There are so many new players of different sizes and different approaches and different technologies who are coming at you from all over the world,” Friedman said. “So benchmarking against competition for pricing in generative AI is certainly very hard to do because the themes are changing so rapidly and the players are changing so rapidly.”

Tomás Hernando Kofman, co-founder and CEO of Not Diamond, a startup that builds infrastructure that allows companies to utilize multiple AI models, agreed. He said that companies that want to provide AI products and services can struggle with figuring out pricing because the unit economics for AI are different from software.

Deploying AI comes with inference costs, which is what a company spends to run a pre-trained AI model, including hardware and cloud expenses. Depending on the size of the model, the length and complexity of the AI’s output, and other factors, inference costs can quickly skyrocket, wrecking even the most carefully planned budgets.

“The inference cost is so high relative to the execution of traditional software programs and that means that people often end up in these very risky pricing models, where it’s like a subscription, flat fee, but you might end up underwater on that,” Kofman said.

Since Not Diamond uses traditional machine learning techniques in its products instead of AI models, the company’s unit economics aren’t feeling the pressure. Kofman said, however, that within the AI market, many companies are still in the investment stage, meaning they could be more focused on performance and quality than cost optimization; at least for the time being, they might be more willing to burn incredible amounts of cash to deliver a result.

“I do see a lot of enterprises, in particular, more comfortable running with poor, even negative, economics just to get their AI products to market,” Kofman said. “I think you’ll see more pricing changes in the space as well, both for AI-powered product prices to go up and for more and more companies to be looking for various cost optimization techniques to avoid ending upside down on the economics.”

Many providers are also experimenting with subscription pricing for AI models that stagger access and capabilities of a model rather than offering products at a flat fee.

Kofman said that the subscription model is “economically prohibitive for a lot of customers to have these subscriptions, which can get up into the hundreds of dollars per month” and offer less choice to customers who want to access different AI abilities for different projects.

 on ChatGPT Pro’s cost per month sitting at $200, with OpenAI’s CEO Sam Altman 

 to share that he chose the price and believed the company would profit from it. Similarly, 

 expanded usage plans with varying flexibility sit in the $100-200 range and 

The Not Diamond founder isn’t the only one who is recognizing the market’s move to subscription models, especially as customers look to have multiple subscriptions across different platforms because they want access to these models. Marion pointed out that many pricing models across the larger market have been one-dimensional, offering a service at a standard fee per every payment cycle.

“Right now, we’re starting to move into fourth dimensions, where you’re looking at your plans, you’re looking at your price, you’re looking at your usage, and you’re looking at the value of that usage,” Marion said. “So that usage can get split into basic amounts and then higher value amounts, for example, AI-delivered solutions.”

Marion continued that he views the top performers in the AI space as currently “enhancing their pricing strategies in response to building and launching AI” through experimenting with pricing models.

Companies with the agility Marion described are trying to get profit margins up and become a player comparable to big box AI providers, like OpenAI, “and they’re losing an enormous amount of money because they’re consuming so much computer costs.”

AI providers don’t know what to charge in a constantly changing market

Are subscription pricing models the answer to AI providers’ issues?

The changes in costs and partnerships that Broadcom VMware announced in May could open the market to competitors and could disrupt professionals trained in the digitization workflows, according to industry experts.

Broadcom, which announced its acquisition of VMware in 2022 and finalized the $61 billion deal in 2023, has come under fire multiple times. In early 2024, CEO and President Hock Tan 

 that “this level of change has understandably created some unease among our customers and partners.” Then, in the summer of 2024, 

 on an industry poll that suggested that customers were anticipating VMware to rapidly increase costs and claw back services, 95% of poll respondents reported that the acquisition was disrupting their IT strategy.

 of 800% to 1,500%, the company has once again landed itself in hot water with cloud service providers and partners.

, have faced off with Broadcom in court as a result of its VMware acquisition. In late July, the Cloud Infrastructure Service Providers in Europe (CISPE) 

 to the European General Court seeking to annul the European Commission’s approval of the acquisition.

“The dominance of VMware software in the virtualization market means that unfair new licensing terms enforced by Broadcom affect almost every European organization using cloud technology,” said secretary general of CISPE, Francisco Mingorance, in a release.

Industry leaders point to VMware client aggregation as an opportunity for other companies, such as Nutanix or Citrix, to step in and fill the gaps.

Chris Brill, Myriad360’s field CTO wrote in July about how Broadcom’s acquisition of VMware gave virtualization room to evolve and vendors a chance to provide services to customer niches within the market.

Myriad360, formerly known as Myriad Supply, became an enterprise partner with VMware in 2015. Brill confirmed via email that Myriad360 was a VMware partner until the middle of this year, when Broadcom removed a number of registered resellers. He said that the company currently has no status with VMware.

“We’re going to see fracturing in terms of the technologies that people are picking,” Brill said. “It really opened up the door for a lot of players to come in and carve out a specific focus based on the clientele that they’re trying to focus on.”

Brill said that with the new price increases, engineers no longer have choice in running the software, which was once a safe bet.

“If you go into 90% of the companies out there, they’ve got VMware somewhere, and they’ve got engineers that had made careers out of that,” Brill said. “Overnight, they’re basically throwing their hands up in the air because their CFOs are saying, ‘we can’t afford this. We have to start looking at options.’”

For IT generalists, this might not be as big of an issue. For specialists, however, the tooling could look different than what they’re used to when it comes to moving away from VMware.

Specialists could, according to Citrix VP of platform marketing, Michael Von Kleef, cross paths into different hypervisors, or virtual machine monitors that can make and run virtual machines by sharing resources like processing or memory, as the principles are the same. Other facets of management and implementation would be different, however.

In a statement to IT Brew, Von Kleef advised specialists to be cautious about continuing to tie themselves to Broadcom VMware because of the chance that customers reevaluate their hypervisor strategy and accelerate transition to other solutions.

“Specialists should ensure they de-risk themselves from the changing demand,” Von Kleef wrote. “The good news is that many of these folks hold some very transferrable skills to other hypervisor and cloud platforms.”

Von Kleef said that there is an opportunity for IT pros to consider adjacent platforms, like XenServer or Microsoft Hyper-V, while still operating as someone who knows how to run infrastructure workloads—but signaled that professionals should remain agile through the changes.

“IT pros should always be looking for what’s next,” Von Kleef said. “It’s always important to just constantly be aware of what’s going to happen. Obviously this was a very disruptive change that perhaps people weren’t expecting as much as it happened.”

How Broadcom VMware’s changes could give a leg up to competitors 

As Broadcom VMware changes workflow virtualization pricing and the partner ecosystem, customers are looking elsewhere for their digital service and software needs. 

Google is continuing its push into the cloud service provider ecosystem with its latest contract with digital workflow management platform ServiceNow.

According to Bloomberg, citing an anonymous source familiar with the deal, ServiceNow will spend $1.2 billion over the next five years on Google’s cloud computing services.

The deal follows ServiceNow’s partnerships with other cloud providers, the company shared in a statement to Bloomberg, which was also provided to IT Brew. ServiceNow declined to reveal specific details of other contracts, including who they are with.

Google did not respond in time for a request to comment. ServiceNow declined to give IT Brew a statement with a named spokesperson.

 to Google’s recent partnerships with companies like Salesforce and OpenAI as evidence for its “growing influence” in the cloud market, despite the historical dominance of AWS and Microsoft.

 that Google would provide cloud computing services to help with OpenAI’s need for increased computing capacity. The deal, which was inked in May, would specifically add the capacity for OpenAI’s “existing infrastructure for training and running its AI models.”

In February, Google and Salesforce announced that they would add Google Gemini to Agentforce, according to a 

“Google Cloud is at the forefront of enterprise AI innovation with millions of developers building with Google’s cutting-edge Gemini models and on Google Cloud’s AI optimized infrastructure,” the release said.

The company said that the deal was an expansion of an “existing partnership” to let customers use data “bi-directionally” from Google BigQuery and Salesforce through 

 which allows professionals to access data from different locations at the same time without needing to move or reformat.

“Salesforce Service Cloud will become more tightly integrated with Google Customer Engagement Suite, bringing enhanced AI-enabled contact center capabilities including real-time voice translation, intelligent agent-to-agent handoffs, personalized agent recommendations, and AI-driven conversational insights across all channels,” the release said.

 to help fund AI initiatives. The new product packaging and pricing will push the company toward the edge of innovation and give its employees access to the technology and other agentic tools, according to a release.

Google signs $1.2 billion deal with ServiceNow

Google will reportedly provide five years of cloud computing services for ServiceNow, according to Bloomberg.

Discussions about AI don’t get very far before someone mentions keeping a human in the loop. As companies look to a more hands-off approach to AI, they could run into an Amelia Bedelia scenario, where their agentic solution is prone to making larger scale mistakes in the spirit of being a helpful bot.

IT professionals agreed that industry is looking to have less of a human touch when it comes to 

, like answering quick questions from employees and customers about IT issues concerning things like accessing an email account.

Pat Casey, chief technology officer and EVP of DevOps at ServiceNow, said that he is seeing more customers ask about taking the human out of the loop for these situations, “and still hav[ing] the constraints in place to prevent the Amelia Bedelia scenario.”

He believes that customers wanting to move away from keeping a human in the loop should put more technical controls into place around the agent, preventing it from stepping out of line or being swayed by bad actors.

Casey said that the use of AI at a company’s IT help desk can be helpful for deflection rates, but the technology should be given the same level of privilege as a human in the position would, rather than complete access.

“Just like a human being, you can make an honest mistake, you can be badly motivated, you can be suborned by a third party,” Casey said. “We have years and decades of governance in [the] technology world about understanding how to take imperfect human beings and put them in part of a business process and get good, repeatable outcomes.”

He continued: “You got to assume agents need to flow through the same imperfect pipeline, rather than through some hypothetical, ‘It never makes mistakes,’ technology pipeline.”

Chief AI officer for industrial AI company IFS, Bob De Caux told IT Brew that he does believe that the human touch with AI bots will be relaxed, but not for some time.

“Even as we remove humans from the loop, it’s not like everything will need to be fully agentic in the way that an LLM will determine the process for decisions to be made,” De Caux said.

Vedant Sampath, CTO at Nexthink, told IT Brew that using AI for help desk support and automating the solutions is “giving the power to the employee to resolve the issues themselves,” which could decrease the need for professionals working in these positions.

“Initially, it will drastically reduce the size of the support desk, because the same number of people will be able to answer many more tickets,” Sampath said. “There will be naturally fewer tickets coming to them…and they might be serving the purpose of bumping it up to a [level two] or other person.”

Sampath suggested training employees to use AI in order to move them to a different position, but maintained that a 

 will not be staffed the way that they have been traditionally, or even currently.

Collaged side by side of an AI robot and human employee working at a desk. (Credit: Morning Brew Design)

Ask AI, then IT

IT pros predict a move away from keeping a human in the loop.

Budget cuts hit, and hit hard sometimes. You might find yourself asking how your team can tighten the belt without 

, then turn to your new “friend” artificial intelligence for help.

While IT professionals believe that automation and AI could reduce costs by using the tech for IT support and help desks, others like Brian Fox, co-founder and chief technology officer of Sonatype, point to the dangers.

“I think we need to be honest with ourselves that this all is new, and it can do some really cool stuff,” Fox said. “Where I would go is, how do I limit the damage, limit the scope of what these things can do? Maybe that means keeping some humans in the loop on some of these things and not just giving it free rein to take automatic actions.”

Others, like Nexthink Chief Technology Officer Vedant Sampath, believes there is an opportunity to reduce costs and improve overall experience for customers and employees through automating IT tickets, which means potentially reducing staff.

“Definitely, this is considered low-hanging fruit for them to…eliminate people, [and] all of the systems that you need to support them,” Sampath told IT Brew.

According to Sampath, IT’s support functions could be replaced with automation—specifically concerning employee and customer interactions that have to deal with service requests, resource questions, and infrastructure support.

Regarding ticket requests to IT teams, which he noted are often outsourced to managed service providers, Sampath said, “AI is ripe for replacing these sorts of simple requests. This isn’t the one where I really need to dig in, understand stuff.”

Justin Vianello, CEO at SkillStorm, agreed that help desks are going to be “subject to significant AI disruption moving forward.”

“You’re absolutely still going to need people to be able to interact with the customers when the AI can’t answer the question or when they simply want to speak to a real person,” Vianello said. “But in terms of managing costs and reducing the number of people that are required for that work, I think we’re going to see a significant change in the next two to three years.”

Vianello said that this could drive more efficiency.

“Often, you’ll dial in to get some sort of customer support and you get sent around in circles,” Vianello said. “Rather than having a specifically trained AI agent.”

He continued: “I think it’s gonna lead to lower costs and I think it’s gonna lead to better outcomes for everybody.”

Fox said that because companies are looking to roll out AI quickly to save money, its hasty deployment will most likely be 

“We’re building a house of cards,” Fox told IT Brew.

Fox said that companies are rolling out AI because “it can do things faster, cheaper, and in some cases, it can do things that a human just can’t do.”

“We’re in such a rush to roll these things out, to recognize the speed, performance, and scale and all the things means people are much more aggressive,” Fox said. “There’s that fear of being left out in the AI gold rush. It creates the perfect storm of, ‘We’re heavily motivated to just forget the learnings of the past,’ but I think the impacts could be much larger.”

AI could be the answer or the detriment to budget cuts for an IT team, professionals say

For things like help desk tasks, experts see professionals looking to move away from the human-in-the-loop approach. 

AI could be the answer to or detriment of budget cuts for an IT team

If US-based Googlers want to say goodbye to their “innies,” the company is offering buyouts to more teams.

Google spokesperson Courtenay Mencini told IT Brew that the company teams are offering the buyout program with severance for employees based in the US, “who many want to leave the company, whether for professional or personal reasons.”

“Earlier this year, some of our teams introduced a voluntary exit program with severance for US-based Googlers, and several more are now offering the program to support our important work ahead,” Mencini wrote.

The statement continued: “US-based employees on teams offering the voluntary program are able to apply regardless of role or level.”

Those on Google’s knowledge and information (K&I), central engineering, marketing, research and communication teams are able to part ways with the company. This follows earlier buyout announcements that affected Google’s 

Buyouts offered to the platforms and devices team were offered as a result of the large operating systems and hardware team’s merger last year, 

, and given as an option to employees that might not have been aligned with Google’s mission.

Mencini did not elaborate on the “work ahead” or respond directly to a question regarding what prompted these buyouts.

 reported that Google is offering a minimum of 14 weeks’ pay with an enrollment deadline of July 1 to employees in some orgs.

, mandating office returns to remote workers who live within 50 miles of an office to begin a hybrid work schedule and bring employees together in-person, which the company confirmed.

The outlet also shared a memo written by Google executive Nick Fox, who leads the K&I team, concerning the buyouts, which reads: “I really (really!) hope you don’t take this! We have ambitious plans and tons to get done…On the other hand, this [voluntary exit program] offers a supportive exit path for those of you who don’t feel aligned with our strategy, don’t feel energized by your work, or are having difficulty meeting the expectations of your role.”