Artificial intelligence has dominated headlines for years, but the real story unfolding now is less about futuristic breakthroughs and more about economics. How will this tech bring about a new revenue path? How and where is the value being created? At first glance, it may be hard to pinpoint, but consumers are already showing what they value and are willing to spend their money on. 

Key takeaways:

1. Consumers are driving AI profits

The path to making AI profitable is being led by consumers who are willing to pay for premium AI features, proving the market's readiness and financial viability.

2. Subscriptions are the monetization model

Subscription tiers are the most effective way to monetize AI. They allow businesses to offer a free taste of AI capabilities while encouraging users to upgrade for more advanced features, directly tying value to revenue.

3. Strategy is essential for AI success

To succeed with AI, businesses must be strategic. This means carefully managing costs, being transparent with users, and using AI not just as a feature, but as a tool to boost customer loyalty and retention.

A recent Bloomberg Opinion article, “AI’s Path to Profits Is Being Driven by Consumers”, highlights how consumer demand and willingness to pay are shaping the economics of AI. For subscription businesses, this is a critical signal: the business models that win will balance consumer value with the real costs of delivering AI at scale.

When does subscription revenue meet AI costs?

According to Bloomberg, premium AI subscriptions priced at around $9.99/month are now generating revenue that’s beginning to offset the steep costs of inference — the compute power required to run models and deliver responses. For some services, those costs are measured in the millions of dollars per month.

This near-breakeven point is important. It shows that consumers are not only willing to pay for AI but that subscription models can be structured to make the economics work. This issue lies in reducing costs and making sure your product provides real value that connects with customers. The essential fundamentals of any product. 

How do we know this trend will hold?

Bloomberg’s insight fits into a broader set of data points showing how consumers are fueling AI growth:

  • 1.8 billion people worldwide already use AI tools, yet consumer spending in this category is still only around $12 billion annually — which means conversion rates from free to paid sit at roughly 3%.

The takeaway: demand is there, but sustainable profit depends on moving more users from free access to paid tiers while keeping cost of delivery under control. 

What does this mean exactly for subscription businesses? 

For subscription leaders, AI is no longer just a “future opportunity.” It’s here, and it’s shaping consumer expectations today. To capture value without eroding margins, businesses should focus on:

1. Getting clear on unit economics

Measure the cost per inference or per active user and align pricing tiers accordingly. Free tiers can introduce users to AI, while premium tiers should reflect the cost of heavy usage. This requires 

2. Designing tiered experiences

Offer differentiated value at each level — for example, basic personalization at entry-level, and advanced AI-powered features (like recommendations or conversational assistance) at premium levels. There’s a lot to learn from past experiences with freemium subscription models. Recurly’s platform makes it easy to create multiple subscription tiers with customized pricing. The system automatically calculates totals based on your chosen pricing model and the quantities entered.

3. Building trust through transparency

Consumers want to know how AI is used, what data it touches, and why it benefits them. Clear communication is as critical as the technology itself in driving adoption.

4. Optimizing infrastructure

From model distillation to smarter inference scheduling, there are many ways to lower compute costs. Forward-looking subscription businesses will invest in efficiency alongside customer experience. This means not only efficiency in your AI systems, but how you scale and grow when entering  new markets and borders. 

5. Managing churn and retention

AI features can be a strong retention lever, but they also add cost. Use engagement tools and feedback loops to ensure features are driving loyalty and not just inflating expenses. Test, test, and test again.  

So what’s next?

At Recurly, we’ve seen firsthand how subscription businesses thrive when they innovate on pricing and product while keeping a sharp eye on retention and margins. AI fits directly into that playbook. The brands that succeed in this new era will be the ones who:

  • Treat AI features as value-drivers for upsell and loyalty.

  • Use tiering strategies to balance acquisition with profitability.

  • Monitor churn, lifetime value, and cost-to-serve with the same precision they apply to revenue recovery and global scaling.

Consumers are already shaping the profit path for AI. Subscription businesses that adapt now — with clear pricing strategies, transparent value, and cost-efficient operations — stand to lead the market in the years ahead.

At Recurly, we help subscription leaders navigate these shifts every day. Whether it’s optimizing pricing, reducing churn, or building smarter subscriber experiences, we ensure your business is ready for what comes next.

If you’d like check out our AI tools, check out our Recurly Compass Page.