A new report from KPMG has revealed that nearly a third of senior executives in the UK are struggling to understand the costs of artificial intelligence after a widespread industry shift towards usage-based pricing. The survey, conducted among C-suite leaders at large British firms, found that 31 per cent said they could not accurately forecast AI spending, with many describing vendor pricing as 'opaque' and 'unpredictable'.
The move away from flat-rate subscription fees to models based on compute tokens or API calls has made budgeting a guessing game, the report warns. One finance director told researchers that monthly AI bills had fluctuated by as much as 40 per cent without clear justification. KPMG's head of technology consulting said: 'Businesses are being sold the promise of AI without the tools to manage its cost. That is a recipe for budget blowouts and stalled projects.'
The confusion comes at a critical time for UK businesses, which are also grappling with new regulatory obligations. The Information Commissioner's Office (ICO) has issued updated guidance on AI accountability, while the EU AI Act — which applies to any UK company deploying AI systems used by EU citizens — imposes strict requirements on risk management and transparency. Firms that cannot accurately cost their AI usage may struggle to demonstrate compliance, experts warn.
For consumers, the pricing shift could mean higher costs passed down the line. Businesses may be forced to increase prices for AI-powered services such as chatbots, personalised recommendations, or automated customer support. Smaller firms, which often lack the resources to negotiate complex contracts, are particularly vulnerable. 'If you cannot predict your AI costs, you cannot price your products sustainably,' said Dr. Helen Cross, an AI economics researcher at the University of Cambridge.
KPMG's report urges companies to demand clearer pricing structures from vendors and to invest in internal cost-monitoring tools. It also recommends that the UK government consider mandating standardised pricing disclosures for AI services, similar to rules already applied to cloud computing. Without such measures, the report warns, the UK risks falling behind international competitors in AI adoption.