[ MSP.DD ] For investors · Updated
How do you check an AI startup's model costs and gross margin?
Short answer
Get the model and hosting bills for the last six months and divide them by active customers and by usage. Then model what happens at ten times the usage. Gross margin is usually where wrapper economics show first, because model costs grow with every request.
Why it matters
Software investors are used to margins that improve with scale. AI products can work the other way: the more a customer uses the product, the more it costs to serve them.
How to check
- 01Collect six months of model provider and cloud invoices.
- 02Compute the cost per active customer and per key action.
- 03Compare it with revenue per customer to get contribution margin per cohort.
- 04Model 10× usage: does the margin hold, improve or collapse?
- 05Check whether heavy users sit on flat-price plans.
Red flags
- Unlimited-usage plans sold on top of usage-priced models.
- No per-customer cost tracking.
- Margin that falls as customers use the product more.
Good signs
- Caching, smaller models or routing that cut the cost per request.
- Pricing that moves with usage.