Credit-Based Pricing: The Business Model That Could Finally Make Productivity Apps Profitable

For decades, building a productivity app meant one of two fates: get acquired by Microsoft or Google, or fade into obscurity. AI, paired with credit-based pricing, may finally open a third path - profitable independence.

While we are all familiar with the productivity suites of Office and Workspace, there has always been whitespace for more targeted tools: calendar schedulers, meeting-note takers, summarizers, grammar checkers, and beyond. Historically, though, these have not been great standalone businesses. For most builders, the best outcome was an acquisition by one of the big suites.

A major reason is pricing. Joel Spolsky once suggested that software should be priced as free, cheap, or dear. His reasoning was rooted in the difficulty of segmenting buyers at the individual level. You either sold cheaply and hoped for massive volume, or you went upmarket into enterprise. Rarely did this produce enduring, independent companies. For individual productivity apps - where usage patterns vary widely, value is uneven, and network effects are weak - this challenge has been especially acute.

Consider Word or Slack. Their jobs-to-be-done, value propositions, and usage patterns are broadly consistent across users. A single price point works reasonably well, and revenue expansion comes through bundling features into SKUs. But that creates complex pricing structures and, often, businesses that are hard to scale sustainably.

Another model has been to lean on network effects - driving stickiness and pricing power not through value delivered but through the inertia of switching. That makes sense for collaboration tools, but not every productivity app needs to be multiplayer. Not every app needs a feed or a chat function.

What we need is a business model where entrepreneurs can focus on delivering natural value to individual users - without requiring organizational rollout or network lock-in.

Enter AI - and, more specifically, credit-based pricing.

I suspect we will see an explosion of productivity applications priced at $4.99-6.99/month (adjusted for purchasing power by region), bundled with a tranche of credits for AI-driven features. As users discover value, their consumption of credits will scale with their needs. Voilà - Joel’s dream realized: infinitely fine-grained segmentation and pricing, finally viable at scale.

Credit-based pricing doesn’t just make productivity apps sustainable - it gives them, for the first time, a path to profitable independence.