Neither flat-rate pricing nor token-based billing recover compute cost

It’s Friday night.
You have friends over.
You’re too tired to cook.
Everyone’s hungry.
They’re getting cranky.

Solution?
Pizza.

Everyone chips in five bucks.

Sounds fair — until one person eats half the pie.

That’s how you’re pricing AI.

Granted, in some cases, charging every customer the same amount — even when their demands are not identical — makes sense when the cost of metering is greater than the cost of undercharging a few.

But flat-rate pricing does not scale at the enterprise level.

Some in the industry have embraced token-based billing. But token-based billing does not measure cost. Tokens measure words. Words are an inaccurate proxy for compute.

Consider these two scenarios:

A guy talks to AI for thirty minutes about his girlfriend. He goes on and on…

How she seems distant.
How she is slow to respond to texts.
How she is mysteriously unavailable.

The system dutifully transcribes every word, responds empathetically and consumes a massive number of tokens — all while avoiding the four words a human would scream immediately: SHE’S CHEATING ON YOU!

Now consider a three-word query:

“Is God real?”

Few questions demand more reasoning, context, philosophy and depth. Yet under token-based billing, that interaction may never recover the cost of compute.

And in both cases, look at the asymmetry between input, output and effort. There is no correlation between number of tokens — either in or out — and compute.

That alone should end the debate over billing.

Tokens are not compute. They are a proxy — and an inaccurate one. If you want to bill for cost, you must meter compute.

Metering compute is not impossible. It’s patent pending.

– Published December 21, 2025