When OpenAI dropped ChatGPT Go at 399 a month, Google countered with free AI Pro accounts for students. Elon Musk’s xAI priced SuperGrok at 700, while Perplexity teamed up with Airtel to push free trials and student tie-ups. At first glance, the flurry of deals and discounts looks like a race to the bottom. While predatory pricing is a no-brainer way to increase sampling, the real question is “beyond the ticket what?”.
A quick clarification. It’s not that experts suggest banning discounting forever; it’s just that it might work better to take a leaf out of the playbook of brands like Netflix that have incentivised adoption by increasing the value the customer receives versus reducing the value of the offering.
Does Netflix offer direct discounts on its subscriptions? No; instead, it has invested in building a content library and technological prowess that other companies envy. Netflix remains the largest OTT (over-the-top) platform globally by subscribers and revenue. Its reasoning is simple —price is rarely a glue. Discounts can drive adoption in the short term, but they do not create loyalty. As Ambika Sharma, founder and chief strategist at Pulp Strategy, points out, “Once the discounts vanish, consumers will only stay if the product delivers consistent value.” She notes that retention depends on quality of experience, trust, and how well the product integrates into everyday life.
Beyond discounts
Another example: Staqu Technologies’ B2B enterprise AI solution Jarvis. It offers zero discount to clients, says Atul Rai, co-founder & CEO. “Our churn has stayed at just 1.5% over four years because customers stay when accuracy and impact outweigh short-term discounts,” he adds. “Price cuts may pull people in, but they also train them to leave the moment someone else is cheaper. Discounts can start the conversation, but only brand experience makes it a relationship,” says Neha Bajaj, founder & managing director, Scroll Mantra.
Now look at how the AI brands are trying to differentiate themselves in an increasingly crowded market. OpenAI seems to want to become the “everyday AI”, a tool seamlessly woven into daily routines. Google, meanwhile, is positioning itself as the “trusted academic ally,” targeting students with education-focused features. Musk’s Grok, true to the mother brand’s personality, is marketed as the “edgy, aspirational rebel”. Perplexity is carving out space as the “research-first” Google challenger, pushing depth of knowledge over chat-style interaction. Add hyperlocal touches like UPI micropayments, study modes, and education bundles, and India has become a testing ground for how AI brands, part of a whopping $8.5-billion industry in the country, craft identity beyond affordability.
On a sticky wicket
Indian consumers’ relationship with price is more nuanced than stereotypes suggest. “This is one of the biggest myths about Indian consumers. They are not price sensitive, rather they are value sensitive,” says Sidhharrth S Kumaar, brand strategist, NumroVani. What matters is ROI, he adds, in the form of products that make life easier, deliver results, and feel worth the spend.
“Roughly 50-60% consumers shift brands and solutions once the initial discount period expires. This churn rate is very high and unsustainable,” says Abhinav Jain, co-founder of Almonds AI. His prescription: loyalty programmes, gamification, and personalised experiences to deepen user-brand bonds.
The key, thus, is to drive value as the industry continues to evolve, points out Imtiaz Bellary, co-founder & MD of Engati.
For Indian startups, the challenge is even more complex. Many brand themselves as “desi AI” with vernacular support and Bharat-first positioning, but global giants brawl with slick narratives and heavy discounts. In such a scenario, trust, vernacular and cultural localisation, ecosystem lock-in, and credibility are emerging as the true differentiators.
Pricing innovations are another lever. “Models like pay-per-use, UPI micropayments, ad-supported AI tiers, and bundling with telecom or fintech apps are being tested,” points out Pulp Strategy’s Sharma. Jain notes that India’s UPI-led micropayments ecosystem makes pay-per-use far more viable here than in Western markets. Telecom bundles, already successful in OTT adoption, are also gaining traction for AI.
Chaitra Vedullapalli, co-founder of Women in Cloud, stresses that lasting success requires more than experiments with discounts. “The companies that win long-term aren’t the ones offering the lowest price, but the ones with true GTM (go-to-market) readiness — a holistic playbook that connects product, promotion, partnerships, and positioning into a trusted ecosystem.”
Observers say Indian users still lean towards low-cost, ad-supported models, but winning in the future will hinge on “capability in local languages with high accuracy, voice interfaces, and consistently accurate performance”, say Shashi Shekhar Vempati, former CEO of Prasar Bharati & co-founder of AI4India and Alok Agrawal, co-founder of AI4India.