Analyst(s): Keith Kirkpatrick
Publication Date: January 17, 2025
What is Covered in this Article:
- Integration of Gemini AI in Google Workspace: Google has incorporated Gemini AI features into its Workspace plans for Business and Enterprise customers without a separate add-on fee, eliminating the previous $20-$30 monthly charges for Gemini subscriptions.
- Updated Pricing Tiers for Workspace Plans: Google has raised prices for Business Starter ($6 to $7/month), Business Standard ($12 to $14/month), and Business Plus ($18 to $22/month), effective January 16 for new customers and March 17 or renewal dates for existing ones.
- Shift in AI Pricing Strategies: Vendors such as Google and Microsoft are exploring consumption-based and outcomes-based pricing models to balance functionality, adoption, and cost. These models aim to demonstrate AI’s value while addressing customers’ cost concerns.
- Future Trends and Market Shifts: SaaS vendors may increasingly move toward consumption or outcomes-based pricing as AI agent-to-agent interactions grow, emphasizing task success over traditional user-based licensing.
The News: Google announced it is integrating its Gemini AI functionality within its Workspace suite of tools for Enterprise and Business customers, instead of charging a separate, add-on fee to access generative AI features. Prior to the announcement of the pricing changes, a Gemini subscription was $20 per month per user for a Business plan or $30 per month per user for an Enterprise plan.
According to Google, the changes to the plans include:
- Business Starter, offering the smallest amount of storage and fewest features, rises from $6 per user per month to $7 per user per month.
- Business Standard, which permits up to 150 people in Google Meet and includes tools such as eSignature, increases from $12 per user per month to $14 per user per month.
- Business Plus, the tier that provides enhanced security and management tools, rises in price from $18 per user per month to $22 per user per month.
New customers will be charged the updated pricing starting on Jan. 16, while existing customers will see it go into effect on March 17 or at their next annual or fixed-term renewal date. For businesses already paying for the Google Gemini add-on, they will no longer be charged for it after Jan. 31.
The following chart provides an overview of the features provided by Gemini across Google Workspace offerings:

Will Google’s New Pricing Model Spur Usage of Gemini Leading to AI Revenue?
Analyst Take: The challenge for Google and other large SaaS vendors is that they are spending heavily on generator AI and AI agent technology, and will need to demonstrate that the technology can be adequately monetized. This is particularly important to large, publicly held companies such as Google, but also for smaller vendors that need to attract and retain funding for new technology initiatives.
On a conference call with analysts, Google noted that it was trying to get more customers to use Gemini and that it did not want cost to be a barrier. Google’s pricing strategy may be likened to the candy model, where a child is given candy, develops a liking or dependence on the sugar, and will then wind up paying for additional candy to satisfy their craving. This approach is ultimately based on a consumption model, where revenue is driven by greater frequency and higher-volume usage over time.
I suspect there’s another factor at work, which is that the AI features themselves simply aren’t yet seen as being a must-have for all workers and use cases. While some may use and derive value from Gemini, the value proposition for other workers and types of work has yet to be solidified, and as such, organizations may be holding back on adding Gemini features. Until these features and capabilities are viewed as being essential, requiring an additional charge on a per-user, per-month basis may not be appealing or viable to many organizations.
That said, this additional per-user, per-month model has been the dominant way the technology has been delivered to date, according to a survey of 895 technology decision-makers conducted by Futurum Intelligence in late 2024. It was found that the model was used by nearly 40% of respondents. Just 28.9% of respondents said that generative AI tech was included as part of the core offering, and 22.9% said generative AI was offered via a consumption model, where users paid for the technology based on how frequently they use it, and the amount of compute resources consumed.
Vendor’s Gen AI Delivery (N =895)

Indeed, additional shifts in the market are likely as vendors try to strike a balance between functionality, adoption, and their own desire to manage cost and drive revenue from AI. Microsoft, for its part, also announced in mid-January that it would charge organizations for Microsoft 365 Copilot Chat using a consumption model within the apps for Windows, Android, and iOS, and on the web at m365copilot.com. Similar to Google, some organizations that initially were interested in adopting Microsoft Copilot were wary of paying the $30 per user, per month fees associated with the generative AI assistant technology. Microsoft 365 Copilot Chat is not as capable as the Microsoft 365 Copilot offering, but it will still be able to fetch information from the web and summarize the text in uploaded documents. Users can also create agents that perform tasks in the background and can enrich answers with information from customers’ files and third-party sources.
Microsoft calculates charges for Copilot Chat based on the tally of “messages” that a client uses. Each message costs a penny, according to a blog post. Responses that draw on the client’s proprietary files cost 30 messages each. Every action that an agent takes on behalf of employees costs 25 messages. Similar to Salesforce’s Agentforce AI Chat offering, which charges customers $2 per conversation, the goal is to provide pricing that is directly linked to the amount of resources consumed, which can often more clearly demonstrate value.
These consumption models are clearly preferred by customers, according to Futurum Intelligence’s decision makers survey, which found that more than half (51.9%) of respondents preferred a consumption model for AI that was not incorporated into the core license price.
Preferred Add-On Gen AI Model (N = 636)

Pricing Models Will Evolve as SaaS Vendors Try to Demonstrate Value and Revenue from AI
I do not believe this is the last word for pricing generative AI. Ultimately, SaaS vendors are trying to demonstrate that AI is contributing to their revenue, and consumption-based pricing is one way to more clearly demonstrate that, along with outcomes-based pricing. Google’s inclusion of Gemini within its Workspace for Business and Enterprise user plans seems like they are simply trying to establish the value offered by Gemini to a skeptical or cost-conscious group of customers.
In the future, I suspect that as usage of Gemini increases, the company may begin putting a cap on usage, and then shifting to a consumption-based model for heavy users. For agentic transactions that are based on volume, I can also foresee a shift to outcomes-based pricing, particularly as we move into agent-to-agent interactions that require zero human interaction.
What to Watch:
- Salesforce, Microsoft, Google, ServiceNow, and others are clearly the 800-pound gorillas in the market for enterprise-focused AI, and the pricing models they deploy will influence the overall market direction.
- As AI agent-to-AI agent interactions increase, expect to see further pricing shifts, particularly as the link between human seat licenses and even resource consumption are increasingly less important indicators of value, compared to whether or not an agent is successfully able to carry out a specific task or workflow.
- Vendors should remain nimble in their approach to pricing AI, and listen to how their customers are assigning value to AI initiatives, in order to select and deploy a pricing model that balances utilization (and enthusiasm) against the demand for cost control and revenue generation.
See the complete press releases on the major SaaS vendors that have announced consumption-based pricing for their respective generative AI services, including Salesforce’s Agentforce pricing announcement, Microsoft’s Copilot 365 Chat, and Google’s new pricing model for Gemini.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Can SaaS Vendors Deliver Recurring Value via AI Agents?
Will Google’s AI Enhancements Help Drive Greater User Adoption?
Will Outcomes-Based Pricing Become the Preferred Pricing Model for AI Agents in 2025?
Author Information
Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.