alt Hacker News> Just because outliers can be money-losing doesn’t mean you should raise the price for everyone.
If they are losing money then it's not priced correctly. That's what I responded to.
Yes, subscriptions work as you say. Plenty of people under utilize subscriptions from prime, to credit cards, to netflix. But if they lost money overall, they too would raise prices. Because that's how economics works. Shortage of capacity, high demand, raise prices until equilibrium.
There's other knobs beyond ToS. They just didn't choose those options.
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> If they are losing money then it's not priced correctly.
Just a few years ago this was the standard business model for startups: attract VC money, offer plans at a loss, capture a huge market, boil the frog with incremental price increases to become profitable.
Companies like Uber wouldn't have been anywhere near as successful if they had been forced to make a profit from day one.
Usage will be roughly a bell curve. Losing money on the extreme upper end is NOT a reason to raise prices for everyone, because that will decrease overall revenue (see: price elasticity).
ToS is the right knob here. When 0.05% of your customers use your product in a way that increases your costs 10,000%, you find ways to stop that. You don’t amortize the cost increase across everyone else.
Yes, they chose the knob of ToS, because that was the way to price it correctly.
I think "offer unlimited but TOS ban behaviors that would cost too much to support" is actually a very normal way that things work instead of "raise prices until equilibrium is reached", including in credit cards. Credit cards do simply ban people they think are "rewards churning" based on a completely subjective TOS policy for example.
Raising prices is a bad strategy if you have a smaller base that costs enormously larger than the rest. "A million users that cost $1 and one user that costs $10 million, charge everyone $10 equilibrium", you're screwing over almost all of your users. The $20/month sub price is basically just not trying to capture the openclaw users, it doesn't make sense that all of the vanilla Claude users should subsidize them (and in fact it wouldn't even work because they will just go to Gemini or ChatGPT if your cheapest paid plan was very expensive to try to subsidize the other users)