One of the buzziest buzzwords of 2024 has been agentic AI. The concept of an AI agent can be nebulous: sometimes a human is in the loop along the way,

Hypothesis Around the Pricing of Agentic AI

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2024-12-23 19:30:04

One of the buzziest buzzwords of 2024 has been agentic AI. The concept of an AI agent can be nebulous: sometimes a human is in the loop along the way, sometimes not. Sometime the input will be based on an LLM, sometimes it will be smaller more tightly trained model.

But generally, the philosophy of agentic AI moves away from “a person prompting an AI assistant question-by-question” into a world of systems and workflows. This post from Simon Willison is well worth reading for those interested in the topic.

Many of the AI assistant tools are priced at least partially on a per-seat basis. In a world of agentic AI, when the output of the system is not necessarily driven by human activity, I suspect usage-based pricing will reign. And in particular, I suspect output tokens will be the key driver.

For existing models, cost/million output tokens is already more expensive than cost/million input tokens. (See Simon Willison’s comparison of model pricing update after the release of the Nova models as a reference point of how large providers are pricing as of December 2024.) The price differences between providers and models is less important for this analysis than the noting the consistency at which the output tokens are 4-5x more expensive than the input tokens.

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