"The real problem subscriptions solve isn't pricing it's cost absorption. As AI moves from pilot to scale, agencies are racking up real expenses - inference costs, token budgets, licensing fees for tools like Runway and Claude - that clients won't accept as sudden surcharges on an invoice. Subscriptions are, therefore, a way of how to stop that from becoming the client's problem."
"Monks negotiates volume discounts on tokens throughout enterprise deals with AI providers, then runs client work on that discounted infrastructure. The subscription fee is set to cover those costs plus margin. In other words, it's the client-facing wrapper on top of whole infrastructure strategy. Bulk token purchasing and subscription pricing only make sense together: one creates the cost structure, the other creates the revenue structure to sit on top of it."
S4 Capital's Monks expects subscriptions to represent roughly a quarter of revenue by year-end, sparking debate about whether subscriptions address agencies' pricing challenges in automated advertising. While subscriptions aren't considered a complete solution, they serve as a practical interim step toward outcome-based pricing. The core value of subscriptions lies in cost absorption rather than pricing innovation. As AI scales from pilots to production, agencies face mounting expenses for inference costs, token budgets, and tool licensing that clients resist as sudden invoice surcharges. Subscriptions enable agencies to negotiate volume discounts on tokens with AI providers, then pass predictable costs to clients through recurring fees. This model works because it pairs infrastructure strategy with revenue structure, making bulk purchasing and subscription pricing interdependent.
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