Over the past few years, many SaaS and AI-powered platforms have moved away from traditional freemium models and adopted a free credit system—where users get a limited number of credits to try premium features instead of having permanently free access to basic ones.
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I think credits make sense from the perspective of a company that needs to pay (typically AI) API providers for every single user action. Instead of requiring a credit card to just tesdt out the product, you can give people free usage without giving them the ability to bankrupt you.
I don’t think it’s optimal for users though. Maybe consumer end users are fine with it, but if your product is an ingredient to other people’s products, credits become a pain.
Also, credits are super annoying to hale if pricing gets complex. Like if you have multiple products that consume different amounts of the same credits for usage, it gets super annoying quickly.
What we’ve seen with B2B customers that works is “progressive billing”: Users can rack up a usage bill of up to $1 at which point they’re invoiced for a dollar. If they pay that, they can use up to $10. If they pay that, $100. After paying the $100 bill, they get to use as much as they want (and pay for it).
Great question @Vedant_Pandya. I think if you can make it work, credits are a great alternative to traditional freemium plans. To @Finn_Lobsien’s point, it definitely requires some work to define the relationship between actions/work and credits.
Monday.com did a great job of doing this recently when they launched their AI credit system.
The easiest application, to Finn’s point, is something like Snowflake, where you can equate credits with a defined amount of compute and call it a day.
@Finn_Lobsien love this perspective. Progressive billing is a cool concept. Any examples of companies that are doing this in the wild? Would love to see an example and learn more.
I don’t think this is an either or thing. There may be reasons to support both. In general, there is a move towards using credits/tokens in genAI apps, especially for horizontal apps where there are many possible or emerging use cases. I shared some thoughts on this here. Why tokens and credits are becoming a standard approach to pricing AI solutions
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