“It used to be the marginal cost of serving a user subscriber for most consumer apps was close to zero. But now with these AI powered products and features that's no longer true because you do have the underlying compute costs to support the AI features.”

AI apps need tiered pricing — compute costs eliminate the zero-marginal-cost software model

The economics of subscription apps changed fundamentally with AI. Duolingo Max, Perplexity Pro, Claude Pro — the pattern is consistent: a free or basic tier without full AI access, and a premium tier for the complete AI-powered experience. Carter argues this structure is necessary for AI apps to protect margins, and that consumers are increasingly receptive because they understand AI compute costs after watching ChatGPT charge $20/month. Bootstrapped and early-stage founders must be especially conscious of this — unlimited AI features at a flat monthly price is often unprofitable.