Hybrid Pricing Model for High-Attribution Products
by Madhavan Ramanujam on July 27, 2025
The hybrid pricing model has emerged as one of the most effective monetization strategies for AI products that have high attribution but aren't fully autonomous. This approach combines a base subscription fee with consumption-based charges, allowing companies to capture value proportional to usage while maintaining predictable revenue.
This model works particularly well for AI products that operate in a "copilot mode" - where the AI enhances human productivity rather than working completely autonomously. The key insight is that these products can clearly demonstrate their value (high attribution) but still require human involvement in the workflow (low autonomy).
Cursor, the AI coding assistant, exemplifies this approach. Their product demonstrably improves developer productivity and reduces coding time - the attribution is clear. However, it's still operating alongside human developers rather than replacing them entirely. In this scenario, a hybrid pricing model makes the most sense.
The implementation involves two components:
- A seat-based subscription fee that covers the basic copilot functionality
- A consumption layer where users pay for AI credits or tokens as they use more advanced features
This model solves several problems simultaneously:
- It provides predictable baseline revenue through subscriptions
- It allows monetization to scale with usage intensity
- It creates natural upsell opportunities as users become more dependent on the product
- It aligns pricing with value creation - heavier users who derive more value pay more
According to Madhavan Ramanujam, this hybrid model is currently the most popular pricing approach for AI products, representing a natural evolution from the pure subscription models that dominated SaaS. While only about 5% of AI companies have reached true outcome-based pricing (the highest-value quadrant), the hybrid model serves as an effective intermediate step for products that haven't yet achieved full autonomy.
For founders building AI products, this suggests a clear path: if your product demonstrates clear attribution but still operates alongside humans rather than replacing them, consider implementing a hybrid model that combines subscription fees with consumption-based charges.