Question it answers
Will this AI investment still pay for itself if the vendor's price goes up?
The return in most AI business cases comes from avoided hiring, saved clinician time, or fewer denials, each measured against the price at signing. Many of those tools run on a few foundation models, and Advisory Board's Ty Aderhold says the independent companies behind them are not yet making money. Bloomberg, citing the Financial Times, reported that OpenAI's costs topped $34 billion in 2025 and its losses rose eightfold. As workflows adapt to a tool, switching gets harder and the vendor's position at renewal improves.
How to use it
- Rerun the case at two and three times today's price. For contracts billed per token or per call, also run the volume a full rollout brings.
- If the case fails at 2x, negotiate price protection before signing (a renewal cap, usage bands, per-call limits, and a defined renewal formula) or plan the exit.
- If it holds at 2x and fails at 3x, the renewal cap and formula carry the case.
Weigh a vendor's willingness to sign caps as a signal about its unit economics. A vendor confident in its costs can afford one, and a refusal may mean it is pricing for a later increase. A cap protects the system when it names the pricing unit, covers new modules and model tiers, and comes with exit terms for data return and portability.
In practice
Take a revenue cycle coding assistant whose annual price is half the cost of the coders a department no longer hires. The case returns two dollars in savings for each dollar spent at today's price, breaks even at 2x, and loses money at 3x. By renewal, the department has gone years without hiring coders and has no easy way back.
Where it breaks
- Price is one condition among several.
- Many AI cases fail on adoption, since saved time pays only after schedules and staffing change, so also test realization at half the promised benefit. Price earns its place as the condition a system can write into the contract.
- A cap can be hollow.
- A cap above today's price, on a unit the vendor can redefine, with new modules excluded, protects little, and a vendor that fails or is acquired may leave no one to honor it.
- Prices may fall.
- The cost of running models may keep dropping. Keep today's price in the base case and use the multiples to set contract terms.
- The multiples are judgment.
- Two times comes from an outside analyst's scenario and three times is our margin. Usage driven by patients may need a wider range.
What it borrows
- A doubled price. Aderhold offered a price that doubles within two years as a scenario for an ambient listening tool, and expects the independent model companies to raise prices or sell advertising on the way to profit (Radio Advisory 318, October 2026).
- Rising vendor prices. Gartner's survey of 200 CIOs found broad agreement that vendor prices would rise across every spending category in 2025 (TechTarget, January 2025).
- Stress testing, which the Federal Reserve uses to check whether large banks could absorb losses in a hypothetical recession. This test applies it to a vendor renewal.