OpenAI is losing money on ChatGPT’s Pro plan.
ChatGPT Pro’s $2,400 annual price tag wasn’t universally embraced at launch. However, the users who did opt in have been pushing the limits of it, at OpenAIs expense.
To address this, OpenAI has added a caveat to their "Unlimited* access to GPT-4" promise, clarifying that usage must be "reasonable" - a mechanism often seen in cellular or internet providers to prevent excessive, and costly, use of their services. But this adjustment alone isn’t enough to prevent massive overages and losses on features designed to generate revenue.
As we move into the era of AI agents, developers exposing their APIs must brace for a future where usage spikes are not just frequent but unprecedented in scale.
AI agents, with their ability to autonomously interact with APIs, are revolutionizing software interactions. However, their very nature - executing tasks rapidly and at scale - can lead to sudden, intense peaks in API consumption. For developers offering APIs, these peaks can overload systems, inflate costs, and degrade user experience.
Whether you’re a $157 billion company or a startup, managing these spikes effectively requires robust entitlements and peak control mechanisms to ensure stability and sustainability.
Understanding Entitlements: The Foundation for Managing Peaks
Entitlements are the permissions or limits granted to users, managing what they can access and how much they can consume within a software product. They play a vital role in defining and controlling user behavior, especially in high-demand environments like AI applications. There are two primary types of entitlements:
- Soft Limits: These provide a threshold for usage but don’t enforce strict restrictions. They can act as guidelines, triggering notifications or alerts when limits are approached or exceeded.
- Hard Limits: These are strict caps that prevent users from exceeding a defined level of usage, thereby ensuring that consumption stays within manageable bounds.
When it comes to managing peaks, hard limits are indispensable. They prevent excessive usage that could otherwise overload your systems or lead to runaway costs. For example, by implementing hard limits on API calls, developers can safeguard their infrastructure from unexpected surges triggered by agentic AI activities.
To dive deeper into how entitlements work and how to design them effectively, check out our extensive blog post on entitlements.
Managing Peaks with Robust Controls
To address peaks effectively, it’s important to first define what they are. Peaks refer to periods of high usage that exceed the average or expected load on your system. These spikes might occur due to a viral user activity, an AI agent’s intensive computational task, or a system event that drives up demand.
Here’s how developers can implement peak control:
- Track Usage in Real-Time: Your system must monitor the number of requests or other usage metrics in real-time. This tracking provides visibility into consumption trends and highlights when users approach their entitlement limits.
- Enforce Limits Dynamically: Entitlements define the limits for each user to ensure they don’t exceed their allocated consumption. For example, if a user is entitled to 10,000 API calls per month, you need to have a system in place that automatically blocks additional requests once that limit is reached.
- Usage Reset Periods: Usage limits may reset after a defined period of time. This reset can occur on a schedule (e.g., hourly, daily, weekly, monthly, or yearly), ensuring that users can continue to access entitlements within their defined periods without manual intervention. This is especially helpful for managing recurring usage features like monthly API call limits or daily quotas.
From Infrastructure Challenges to Growth Opportunities
Let’s shift the perspective. Spikes in API usage aren’t just challenges to overcome - they’re opportunities to grow.
By offering tiered service plans with different usage limits, you can create fairer pricing models that cater to a wide range of customers. For instance, smaller businesses might benefit from a basic plan with lower limits, while enterprises could opt for premium tiers with higher limits and additional perks. This approach ensures you’re not leaving money on the table while aligning the cost of your service with the value it delivers.
To enable such a strategy, you’ll need robust metering and entitlement systems in place. These systems allow you to track and manage usage dynamically, ensuring each customer gets the right level of service based on their needs and willingness to pay.
If your infrastructure isn’t quite ready for this level of flexibility yet, it’s worth exploring solutions that can help you get there. (Absolutely unbiased opinion - check out Stigg)
Rethinking Pricing for AI Agent Users
Agent AIs are already becoming integral to many businesses. Consider tools like AgentGPT, which automate lead generation for sales teams - from identifying promising prospects to crafting tailored outreach messages and providing real-time analytics on campaign performance.
Visionaries like Elon Musk (Tesla, SpaceX, X), Jensen Huang (NVIDIA), Satya Nadella (Microsoft), and Mark Zuckerberg (Meta) predict that AI agents will soon take over numerous tasks currently performed by humans.
Imagine an AI agent seamlessly managing procurement, customer service, or even software development tasks. This evolution means that AI agents could soon become not just users of your APIs but the ones who purchase it, too. Consequently, your next pricing model and monetization strategy might need to cater more to AI agents than human users. AI agents, unlike humans, can operate tirelessly, executing thousands of tasks per second. This unique behavior calls for tailored monetization approaches to handle their distinctive patterns of usage.
To capitalize on this shift, developers need flexible infrastructure that enables differentiated pricing and service levels. Here’s where entitlement management shines. By leveraging a robust entitlement system, you can:
- Offer Tiered Service Levels: Different customer segments have different needs. For instance, small businesses might require a lower-tier policy, such as 10,000 API calls per month, while large enterprises might need a premium tier with 1 million calls per month and priority support.
- Enable Usage-Based Pricing: With entitlements, you can introduce pricing models that align with consumption patterns. For example, charge based on the number of API calls, data processed, or specific features accessed. This ensures fairness and scalability for both you and your customers.
- Maximize Revenue Opportunities: By tailoring pricing and entitlements, you avoid leaving money on the table. A small startup can start with an entry-level plan, while an enterprise AI agent handling vast operations pays a premium for advanced features and higher limits.
- Deliver a Better Spend Experience: Empower customers - whether human or AI agents - to understand and control their usage. Provide transparent usage dashboards, proactive notifications when nearing limits, and options to upgrade seamlessly.
For example, imagine offering a “freemium” plan to attract small startups while reserving premium tiers for enterprises that demand high-volume usage and advanced analytics. An AI-driven startup might use your API modestly at first but scale rapidly as its agents take on more tasks. With a well-designed entitlement system, you can accommodate their growth while ensuring they pay for the value they receive.
Preparing for the Age of Agentic AI
Agentic AI is transforming how we interact with technology, but it’s also introducing new complexities for developers. Peaks in usage, driven by the autonomy and resource demands of these agents, are inevitable. Managing these peaks requires a proactive approach that includes entitlements to define boundaries and peak controls to enforce them.
By leveraging tools like Stigg, developers can:
- Monitor and understand usage patterns in real-time.
- Define and enforce both soft and hard entitlements.
- Automatically reset usage metrics to reflect recurring allowances.
- Create tailored monetization experiences that align with customer needs.
The result is a system that not only meets user needs but also ensures scalability, cost-efficiency, and reliability. As AI continues to evolve, having these measures in place will be a key differentiator for developers building the next generation of intelligent applications.
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If your current system may not be fully prepared for the demands of Agentic AI, Stigg can help. Explore our platform or reach out to us directly to learn how we can optimize your infrastructure to handle AI-driven peaks, manage usage effectively, and get you ready for a new wave of customers.
