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A Big Week in Tech: NotebookLM, OpenAI’s Speech API, & Custom Audio
a16z Podcast
Gen AI Surpasses SaaS: Embrace Consumption Revenue
Gen AI companies are achieving revenue scales at a much faster rate compared to traditional SaaS businesses. This rapid growth can primarily be attributed to their consumption-based pricing models, which align more closely with how services are consumed. In contrast, many SaaS companies rely on fixed monthly fees, limiting their revenue potential. Additionally, Gen AI services often tie their pricing to labor cost subsets, which traditionally command higher prices than standard software costs, further enhancing their financial performance.
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