GitHub Copilot Shifts to Usage-Based Pricing: AI Economics Drive the Change

The software industry's pricing model is undergoing its most significant transformation in years. On Monday, Microsoft-owned GitHub announced that starting June 1, all GitHub Copilot plans will transition to usage-based billing: fixed fees will be replaced by a system of "GitHub AI credits" tied to token consumption. This move is the latest in a wave of enterprise software companies abandoning traditional subscription models in favor of consumption-based ones, where customers pay for the exact volume of AI they actually use.

The Information reported Monday that dozens of enterprise software companies have ditched fixed per-seat subscriptions as AI reshapes their business models. By the end of 2025, this trend had more than doubled compared to the previous year, with companies across the industry introducing or expanding usage-based pricing tied to AI features.

A New Approach to Pricing 

This shift is unfolding among the industry's biggest players. On April 14, HubSpot moved to an outcome-based pricing model for its AI Customer Agent, charging $0.50 per resolved conversation instead of a flat $1.00 per conversation. Salesforce introduced "agentic work units," and Workday launched "Flex Credits"—a prepaid digital wallet from which customers draw funds as they use AI agents and features. ServiceNow adopted a hybrid model with guaranteed minimums and flexible consumption metrics. Adobe adapted its pricing for AI features through Firefly, using credits for AI-generated images.

Analysts, after meeting with approximately 40 software and internet services companies, wrote in an April note that "companies are increasingly positioning their AI workflows as selling a unit of labor or a unit of productivity, allowing them to pursue larger deals and access new budgets."

Why the Transition is Happening 

AI economics are dictating the changes. Running large language models and AI agents requires expensive GPU compute, and a fixed price per seat does not account for the real differences in how actively a given client uses AI. As GitHub explained in its announcement, consumption-based billing "better aligns price with actual usage" and "is an important step toward a sustainable and reliable Copilot business." Under the new model, one AI credit equals $0.01, and credits are consumed based on the number of tokens in each interaction.

According to analysis by Stripe, by 2026, 74% of software providers had switched to some form of consumption-based pricing model. In 2025, SaaS product prices rose by an average of 8–12%, with industry experts attributing a significant portion of this growth to the so-called "AI tax"—providers passing GPU costs on to customers.

Market Reaction and Outlook 

On Monday, shares of applied software companies rose, continuing a broad market recovery. The Nasdaq Composite index reached historic highs following an April slump. The rally reflects growing investor confidence that leading software companies will successfully monetize AI rather than be displaced by it. As Business Insider reports, the industry-wide shift means software costs may become less predictable for corporate clients—however, for providers, it opens the opportunity to build pricing based on created value rather than the number of users served.