Every company in the world offers some free services, they may have started as free because they were additions to the brand but overtime, someone will also consider that is an asset that can be monetized. The process is easier to see in the software world, where there are free add-ons and eventually numbers build up and someone will ask will people pay for the service? If the answer is yes, how much? If the answer is no, will they move to alternative software? No one knows the answer, but people keep trying to add fees.

In an article by Greg Bensinger of Reuters, a good example is Amazon revamped Alexa due to be released before the holiday season.

Amazon plans to charge $5 – $10 a month for the new “Remarkable” version of Alexa. The “classic” version will be free. Alex will use powerful generative AI to answer complex queries.

To ramp up Alexa has taken a lot of work and setbacks, which is why Amazon has turned to Claude, an AI chatbot developed by startup Anthropic. (Amazon has a $4 billion investment in Anthropic).

Alexa has been around for a number of years and can be accessed through Amazon TV or Echo devices. It can set timers, play music, act as central hub for smart-home controls and answer one-off questions. Can it do more?

Bank of America analyst Justin Post estimated in June that there are about 100 million active Alexa users and if 10% opted for the higher fees that bring in $600 million in annual sales. Amazon does not release active users but it has sold 500 million Alexas.

Amazon is the same company which now charges $139 for Prime memberships, is used to be less a $100 a few years ago and more than 76.6 million households have an account.

Linking to dividend paying stocks, finding the correct amount to charge for a service or product is both an art and science. If you get it correct, addition fees flow into the company because people see value. Over time as long as people see value, increasing the fee increases cash flow.

There are more questions than answers, till the next time – to raising questions.