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AI & hybrid pricing drive double subscription growth rates

Yesterday

A study from Chargebee has found that businesses pairing artificial intelligence (AI) adoption with hybrid pricing models are experiencing twice the subscription growth of those that do not align pricing with AI enhancements.

The 2025 "State of Recurring Revenue & Monetisation Report," conducted by Chargebee in partnership with research firm Centiment, surveyed 473 finance, product, and go-to-market leaders across the United Kingdom and United States. The report set out to examine how organisations are adjusting revenue strategies and pricing models in response to technological changes, particularly the integration of AI.

The analysis found that companies incorporating AI into their products and simultaneously adjusting their pricing models—combining fixed subscription fees with usage-based options—are nearly two times more likely to achieve significant growth than those implementing AI without modifying pricing structures. Businesses utilising hybrid pricing were not only more likely to achieve growth, but also reported profit margin gains at more than twice the rate compared to peers using strictly usage-based pricing models.

Krish Subramanian, Co-Founder and Chief Executive Officer at Chargebee, commented, "We're entering a new era where monetisation innovation is just as important as product innovation. Growth isn't just built, it's monetised. This report shows how the best-performing companies are future-proofing their revenue by aligning innovation with value delivery."

Among the report's key findings, 96% of the businesses surveyed expect revenue growth in the current year, with two-thirds anticipating increases of greater than 20%. AI has emerged as the leading technology priority, with 77% of respondents stating it is their top investment focus—an increase of 67% from the previous year. AI was cited at more than double the rate of the next most common investment target, finance automation.

AI adopters are especially optimistic: 96% of firms that have implemented AI predict growth, compared to 69% of non-AI companies. The study highlighted an "AI monetisation divide," with 80% of organisations that have added AI to their products also making changes to their pricing models. Those who aligned AI-driven product enhancements with new pricing approaches were twice as likely to expect high growth. By contrast, 83% of companies without AI made no corresponding pricing changes.

The findings also shed light on challenges facing subscription businesses beyond technological integration. Although 70% of surveyed companies raised their prices in 2024, 40% of those increases did not align with perceived customer value, potentially creating a disconnect between cost and value in the eyes of consumers. This mismatch has led to increased concerns about customer retention, with 53% of brands expressing 'retention anxiety' and 76% predicting higher cancellation rates.

Differences were also observed in how AI and non-AI firms approach retention. AI adopters are prioritising product innovation and customer experience, whereas non-AI companies tend to focus on customer acquisition and metrics such as net revenue retention rates exceeding 100%.

Guy Marion, Chief Marketing Officer at Chargebee, stated, "This report confirms what many GTM and product leaders already feel: pricing is no longer just a finance lever; it's a strategic growth function. Companies that proactively evolve their monetisation models are not only outperforming financially, they're building better customer outcomes."

Additional findings from the report include that 83% of respondents test pricing before making any changes, with those acting within one month seeing more success. Common challenges encountered during pricing adjustments include gaps in metering, complexity of usage models, and technical constraints. The report also observed that pricing decisions are multidisciplinary, most frequently led by executive teams (29%), followed by finance (17%), sales (15%), and revenue operations (14%).

Hybrid pricing—the combination of subscriptions and pay-per-use—was found to be particularly effective. Sixty-seven percent of companies using hybrid pricing expect improvements in margins, compared to just 32% of those employing solely usage-based pricing. Subscriptions continue to form a core part of pricing strategies, featuring in 75% of approaches.

The report serves as a resource for businesses in the subscription and AI sectors seeking to refine their monetisation strategies in pursuit of sustainable revenue growth.

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