The promise of AI technology is real, but so is the risk… and the price. It may be time to reconsider our approach.

The latest advances in AI software promise to bring your business improved speed, efficiency and accuracy. The right technology can enhance your productivity, free your people up to use their talents in more meaningful ways and empower your organization to reach new heights of success.

On the other hand, implementing new technology can be risky, expensive and disruptive. Not only that, but if you don’t have the right people in place to leverage this technology, all those promises can come up empty. That’s why some service vendors are rethinking their approach to pricing. Forward-looking vendors are dispensing with software licensing fees, instead charging clients for access to human-in-the-loop (HITL) support and throwing in access to powerful AI tools for free.

But before we explore this new approach, let’s consider the current state of AI pricing.

The Status Quo: Licensing First, Outcomes Later

The standard pricing model used for modern AI traces back to ancient technological times—the mid-1970s, to be precise. That’s when companies began to copyright software as intellectual property and charge businesses licensing fees to use their technology.

With this traditional pricing model, businesses typically pay for tiered subscription plans to access proprietary software. Subscription plans often included usage limits, maintenance fees and additional charges for customized integrations or enhanced customer support.

Interestingly, while our technology has undergone a remarkable transformation over the last 50 years, this pricing model has remained largely unchanged. When it comes to paying for access to advanced AI tools like OCR, document processing, customer service bots, transcription engines and machine learning platforms, we’re still living in the ‘70s.

What’s Wrong With This Pricing Model

Businesses may be paying for licensed ownership of AI technology, but it’s rare that these tools come optimized for your needs right out of the box. You’ll usually need to address issues of data quality, identify process exceptions, adhere to regulatory constraints and adjust inputs to match your unique operational nuances.

This is a heavy lift, one that requires regular human intervention. That intervention may come from your own in-house team, along with a learning curve and some degree of operational disruption, or it could come through additional third-party support.

Either way, that layer of human intervention is rarely priced into the initial licensing and implementation of the software itself. As human oversight proves necessary, you can expect the cost of ownership to rise. This can delay your ROI, or worse yet, place it entirely out of reach.

Lowering The Cost And Risk Of AI

Now, consider a pricing model in which businesses pay for the true source of value—the human beings turning AI tech, tools and output into insight, action and productivity. In this pricing model, businesses pay for the HITL support that makes AI technology function effectively.

The AI tools are then simply embedded in those human services. After a one-time setup fee, there are no additional expenses for licensing. If the technology changes or evolves, those human providers evolve with it at no extra cost to the client.

In this context, AI software is no longer sold as the primary product. It is merely one of many tools used by the provider to honor your service agreement.

Here’s how it works:

• Setup Fee: Client pays a small fee for onboarding, system setup and workflow design
• Free AI Tools: Client gains access to AI tools that are optimized by, maintained by and licensed to the vendor
• Human-In-The-Loop Pricing: After setup, pricing is based on the level of human oversight required for ongoing tasks, such as exception handling, quality assurance and validation.

Why This AI Pricing Model Is Better Than The Status Quo

1. Pricing In The Partnership

With this model, you aren’t just purchasing technology from a vendor. You’re entering into a partnership with a service provider. You aren’t dealing with a provider who will simply sell you the tech, then “take the money and run.” This human-first approach means that your vendor has to stick around to make sure your AI is usable, reliable and tailored to your needs.

2. Lowering The Barrier To Accessing AI

The biggest hurdle many small- and medium-sized companies face when scaling up is the cost of expensive software licensing. Some of the most advanced and sophisticated AI innovations are only available to the biggest corporations. By removing the software licensing cost from the equation, vendors can level the playing field for smaller businesses and startups. This makes it possible for smaller players to access the leading-edge AI solutions without the costly upfront investment.

3. Building In The Scalability

Once you’ve invested in in-house AI implementation and software licensing, that money is spent. There’s no scaling back on your investment, even if your business or the economy takes a sudden hit. In contrast, paying for human support on a usage basis means you can be nimble about managing your costs. Need more support during peak seasons? Need to reduce capacity during a slow quarter? When you’re paying for usage-based human services, you can scale your spending up or down as needed. This elasticity can be a game-changer for businesses seeking that delicate balance between growth and caution.

The Growing Role Of BPO

Leading business process outsourcing (BPO) vendors are uniquely positioned to pioneer this new pricing model because of the access they provide to the latest technology and because of the experience, knowledge and expertise of the people they deploy to harness this tech.

This means that BPO clients gain access to something more than sophisticated tools; they get the value of real human ingenuity. Rather than focusing solely on cost, this “flipped” AI pricing model prompts businesses to consider not just technology and data, but also how to leverage these assets to their advantage.

The flipped pricing model operates on a crucial premise: qualified human beings remain the secret ingredient for success.

See full article on Forbes here