Newsletter · 14 min read

Why everyone's switching to AI credits

Kyle Poyar · Growth Unhinged Freemium Advanced

The margin defence most companies are actually reaching for. Poyar's number is the one to remember: roughly 70 to 80 percent of token consumption comes from about 10 percent of users, which is why a flat seat price on an AI product bleeds quietly.

  • 70 to 80 percent of token consumption comes from about 10 percent of users, which is what breaks flat pricing.
  • Microsoft, Salesforce, Cursor and OpenAI all moved to credit based models within months of each other.
  • Model costs are not falling as promised: GPT-5 output is around 10 dollars per million tokens, close to GPT-4o in early 2024.
  • Credits exist as a guardrail because AI gross margins are already thin, not because customers asked for them.
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The question it answers

  1. My AI features cost real money every time someone uses them. How do I stop gross margin from collapsing?

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  5. Podcast · 72 min Pricing your AI product: Lessons from 400+ companies and 50 unicorns | Madhavan Ramanujam Madhavan Ramanujam, with Lenny Rachitsky
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