Layer 1 · Chapter 4

Business Models and Economics

AI ApplicationsBook sectionVersion 0.3

AI applications can be sold like software, labor, infrastructure, or outcomes. The business model shapes both the product and the risk.

Subscription software

The customer pays a recurring fee per user, team, or organization. This is familiar, but pricing may become difficult when AI usage costs vary widely.

Usage-based pricing

The customer pays per document, minute, task, call, image, token, or transaction. This aligns revenue with activity but can make bills unpredictable.

Service-as-software

The company charges for completed work that was previously performed by employees or outsourcing firms—for example, a processed claim, reconciled account, or qualified lead.

Outcome-based pricing

The provider receives a fixed fee or share of value created, such as revenue recovered, costs reduced, or cases resolved. This can support higher prices but transfers more responsibility to the provider.

Economic questions