The Chatbot Is the Free Sample—Here's What They're Actually Selling

Every AI company right now is giving away a chatbot. ChatGPT, Claude, Gemini, Copilot—they're all free or nearly free to try. You can ask them anything. Generate code. Write emails. Summarize documents.

It feels like magic. And it's basically free.

That should make you curious. Because nothing is ever really free. So what's the actual business model? What are they selling if the chatbot is free?

The Chatbot Is the Free Sample

Think about Costco. You walk in and there's a person handing out little cups of whatever they're promoting that day. You try it. Maybe you like it. Maybe you buy the whole package.

The sample isn't the product. The sample is the introduction to the product.

That's what every AI chatbot is right now. It's the free sample. It's designed to show you what's possible, get you hooked on the capability, and then... convert you to something else.

The question is: convert you to what?

The Three Business Models

From what I can see, AI companies are pursuing three different business models. And understanding which one a company is chasing tells you a lot about how to think about them.

1. The Platform Play

This is what OpenAI and Anthropic are doing. The consumer chatbot is nice, but the real money is in the API—selling access to the model so other companies can build products on top of it.

Every time you use an app that says "Powered by GPT-4" or "Built with Claude," that app developer is paying OpenAI or Anthropic for every query. At scale, that's a lot of money.

The free chatbot is marketing. It shows developers what the model can do. It builds brand awareness. It creates a pool of users who are already familiar with the interface, which makes it easier for apps to adopt the same model.

But the real customers aren't you and me. They're the companies building on top of the infrastructure.

2. The Enterprise SaaS Play

This is what Microsoft is doing with Copilot. The free tier exists, but the goal is to get enterprises to pay $30/user/month for Copilot Pro integrated into Office 365.

Think about that math. If a company has 10,000 employees and rolls out Copilot to all of them, that's $300,000 per month. $3.6 million per year. For one customer.

The consumer chatbot is a proving ground. It's where Microsoft tests features, gathers feedback, and builds case studies. But the money is in enterprise contracts.

Same with Google and Gemini. The chatbot is nice. The real play is Google Workspace with AI features baked in.

3. The Data and Distribution Play

This is what I think is happening with some of the newer players, and it's the most interesting to me.

If you can get millions of people using your chatbot every day, you learn an enormous amount about what people actually want to do with AI. You see the use cases. You see the workflows. You see where people get stuck.

That data is incredibly valuable for building the next thing. Not necessarily the next chatbot—the next application layer on top of the model.

You're not the customer. You're the focus group.

What This Means for Business Owners

If you're running a business and thinking about AI, here's what I'd take away from this:

The chatbot isn't going to stay free forever—or it'll get worse over time. Free tiers will shrink. Usage limits will tighten. Features will move to paid plans. Plan accordingly.

The real value is in integration, not standalone chat. A chatbot you have to copy-paste into is useful. AI embedded into your actual workflows is transformative. Look for tools that integrate with what you already use.

Be skeptical of "AI-powered" tools that are just wrappers. A lot of startups right now are just putting a nice interface on top of ChatGPT's API. That's fine, but understand that you're paying a markup for convenience. Sometimes that's worth it. Sometimes it isn't.

Your data is part of the deal. When you use a free AI tool, especially with business data, assume that information is being used to improve the model. For some use cases, that's fine. For sensitive information, maybe not.

Where This Goes

The chatbot gold rush reminds me of the early days of social media. Everyone gave away the product for free to build a user base. Then they figured out the business model later.

Some companies succeeded. Others didn't. But the ones that won weren't the ones with the best free product—they were the ones who figured out how to monetize the attention.

AI is following the same playbook. The chatbots are grabbing attention. The business models are still being figured out. In a few years, we'll know who won.

In the meantime, enjoy the free samples. Just remember: you're not the customer.

You're the proof of concept.