Companies reassess expensive AI tools after usage-based pricing leads to budget overruns and unpredictable expenses.
Businesses are pivoting toward smaller, cheaper AI models as rising costs strain budgets. Executives like Microsoft’s Satya Nadella and Palo Alto Networks’ Nikesh Arora argue these models can meet most corporate needs, replacing pricier alternatives.
The shift follows a move from flat-rate subscriptions to usage-based pricing, which has led to unpredictable bills. Tokens, the units measuring AI usage, have seen falling prices, but total costs per task are climbing. Uber, for example, exhausted its 2026 AI budget in four months after employees overused coding tools.
Startups like BlueRock report customers facing 20% to 30% budget overruns due to the pricing change. The trend reflects broader concerns over AI spending efficiency as adoption accelerates.