our definitive AI dictionary and terminology<\/a>, tokens is the unit in which AI tools measure input and output. It is like an electricity unit, which can be metered. In 2026, as pressure on Google, Anthropic and OpenAI mounts to show AI-related revenue, they are moving to token-based pricing for their clients. <\/p>\nIn the earlier pricing, AI companies were subsidizing the AI use. It has been estimated that Claude and ChatGPT cost around $1500 to $5000 to run for a user who pays just $200 per month. But now with AI companies coming under pressure to show revenue, the subsidy is gradually ending. From Claude to Gemini, everyone is moving to token-based pricing instead of a flat monthly or annual fee. <\/p>\n
According to reports, tech giants like Microsoft and Uber are struggling to control their AI expenses. (Image created using AI by Divya Bhati)\n<\/p>\n
On May 20, Google informed Gemini users that \u201cwe\u2019re introducing compute-based usage limits that factor in the complexity of your prompt, the features you use, and the length of your chat.\u201d The same is the story with Claude and, in certain instances, ChatGPT.<\/p>\n
The token-based pricing is going to be prohibitively expensive for most companies and users. Even the well-heeled clients, like Microsoft that has billions in profit and revenue, are feeling the pinch. Kashyap says token-based pricing may work during pilot projects, but it becomes far harder to sustain when thousands of employees start using AI tools every day.<\/p>\n
The token-based pricing is so steep that some in the tech industry are saying that it makes AI more expensive than having a human employee. Even Nvidia, which has become the world\u2019s biggest company as it rides the AI wave, is clear. Bryan Catanzaro, Nvidia\u2019s vice president of Applied Deep Learning, recently noted that for his team, \u201cthe cost of compute is far beyond the costs of the employees.\u201d For him it is probably cheaper to hire a human instead of relying on Claude Code tokens. <\/p>\n
Companies need to recalibrate <\/p>\n
Industry insiders say the rising cost doesn\u2019t mean AI hype and boom is headed for a bust. Far from it. But it is likely to lead to recalibration of AI strategies within companies.
Sunil Golani, head of cloud solutions at Ingram Micro, says businesses should view AI as a strategic investment rather than a short-term cost-cutting tool. \u201cThe conversation needs to shift from cost to value,” he tells India Today Tech. \u201cThe real question is not how much AI will cost, but what enterprise value it can unlock.\u201d<\/p>\n
One aspect of AI use that industry insiders highlight is the volume. They say that companies need to watch out for volume. This is apparently a problem that Microsoft is struggling with. Reports highlight that employees are using Claude Code so much that it is leading the AI tools to consume 2X to 3X tokens even for simple coding work. <\/p>\n
Rahul Garg, founder and CEO of Moglix, an e-commerce company, highlights that the AI cost is driven by volumes. \u201cThe driver is volume, not price,” he tells India Today Tech. \u201cToken prices have fallen nearly 80 per cent in the past year and close to 99 per cent over three years, yet enterprise AI spend has roughly tripled in the same window.\u201d<\/p>\n
According to Garg, agentic AI workflows can consume between five and thirty times more tokens than a traditional chatbot query. In other words, even if individual AI interactions become cheaper, overall spending is rising as companies deploy AI across more teams and business functions.<\/p>\n
The rising cost, notes Zeiss India CFO Dhaval Radia, should force companies to rethink unchecked AI adoption. \u201cAI is not becoming too expensive. Instead, unmanaged AI is becoming expensive,\u201d he tells India Today Tech.<\/p>\n
Radia believes the industry is moving beyond the experimentation phase. The first wave of AI adoption was driven by excitement and curiosity. The next wave will be driven by accountability. He says, \u201cWe are now entering the phase where business leaders will ask harder questions: what productivity is actually unlocked and what business outcome does each token consumption support?\u201d<\/p>\n
This is a sentiment echoed by Srividya Kannan, founder and CEO of Avaali Solutions. She believes that many organisations have spent too much time measuring AI adoption and not enough time measuring the value it brings. \u201cMany organisations have measured AI adoption by usage, number of pilots, employees enabled or agents deployed,\u201d she says. \u201cThe next phase must be about measuring the cost of AI against business outcomes.\u201d<\/p>\n
The business outcomes need to matter because not adopting AI is not an option. Instead, the adoption needs to be managed better.<\/a> Vijay Gopalakrishnan, partner at Deloitte India, suggests a way out of the AI conundrum that enterprises will inevitably face. He says companies should focus on selecting the right business use cases for AI instead of going with a shotgun approach. \u201cAI doesn’t have to be expensive for enterprises,\u201d he says. \u201cCosts can be managed when an AI solution is designed and operated effectively.\u201d<\/p>\n– Ends<\/p>\n
Published By: <\/p>\n
Divya Bhati<\/p>\n
Published On: <\/p>\n
May 26, 2026 15:46 IST<\/p>\n","protected":false},"excerpt":{"rendered":"The promise of AI in 2025 was simple: adopt it and you will save on operational cost. This…\n","protected":false},"author":2,"featured_media":51276,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[30365,30369,30371,30374,30368,30363,30366,30360,30364,30372,30362,30370,30373,420,7829,30361,320,7828,30358,30367,30359],"class_list":["post-51296","post","type-post","status-publish","format-standard","has-post-thumbnail","category-microsoft","tag-ai-adoption-challenges-2026","tag-ai-budget-blowouts","tag-ai-business-outcomes","tag-ai-cost-management","tag-ai-cost-vs-human-employee","tag-ai-expenses-corporate","tag-ai-industry-recalibration","tag-ai-productivity-no-gains","tag-ai-roi-concerns","tag-ai-strategic-investment","tag-ai-token-pricing","tag-ai-usage-scrutiny","tag-ai-volume-impact","tag-azure","tag-azure-ai","tag-claude-code-cost-issues","tag-microsoft","tag-microsoft-ai","tag-microsoft-ai-cost-rising","tag-token-based-ai-pricing","tag-uber-ai-budget-exhausted"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/51296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=51296"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/51296\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/51276"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=51296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=51296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=51296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}