AI products bring marginal costs back to software
Originally posted on LinkedIn, February 9, 2026.
An AI startup I know spent $50,000 in a single month on AI. The team has four people, and this is not an isolated case. Something has changed in business, and many companies still have not absorbed it.
The SaaS era created an economic model that brought software companies enormous gains. You built a product once and sold it repeatedly, while the cost of serving the next customer was close to zero. Traditional industries, by comparison, had marginal costs that declined with scale but never disappeared.
AI products break that model because the product itself is computation happening in real time. Every action consumes compute, and every customer adds cost, not just revenue. We have returned to an older economic model, with major consequences for companies.
Once you understand this, you realize that you are not running a software company in the traditional sense. You are running a business with a real marginal cost that follows every user and every action.
It looks more like the restaurant business. A restaurant can be packed and still lose money because every dish must be planned, priced, and served without letting the margin disappear along the way. Order too many ingredients and you lose money. Order too few and you miss sales.
AI companies buy intelligence wholesale and sell it wrapped in a product. This is becoming less of a licensing business and more of a margin business. It is a new operating model that requires every CEO and founder to rethink how the company competes and wins.
