Last Friday, Anysphere's CEO, Michael Truell, took the time to apologize for an unexpected pricing change concerning their super-popular AI-backed coding environment, Cursor. This comes after some users aired their complaints about extra charges popping up on their Pro plan, which usually costs about $20 per month. In a personal blog post, Truell admits that the situation wasn't handled as well as it could have been, expressing regret at the lack of transparency.

The incident Truell mentioned dates back to an update issued on June 16, affecting how Pro users access the AI services offered by big names like OpenAI, Anthropic, and Google. Previously, users could expect 500 fast responses from these AI models, with no extra charge for any additional, slower responses. But under the new plan, subscribers now get a capped usage worth $20 a month. This means that once they reach this limit, they'll need to buy additional credits to keep using the service.

Unsurprisingly, following this announcement, the complaints started rolling out on social media. Most were about running out of requests quickly, with many claims about unexpected additional costs. The new offering also had an "auto mode", but unlimited usage was only available for Cursor’s “auto mode”.

The company reports that they're looking into refunding users who were ambushed by additional charges and promises a clear vision for the pricing changes in the future. Anysphere, however, didn't comment beyond the content of the blog post.

The root cause of this issue, according to Truell, lies in how AI models are becoming pricier, particularly for more complex tasks which require more time and computational resources. As a result, these costs had to be shifted to the users.

As AI technology continues to develop at a rapid pace, costs associated with high performing models are also seeing an increase. Some models are even ramping up their charges as they offer premium, high-speed performance with special access priority. These additional expenses have had a ripple effect across the industry, making AI coding tools increasingly expensive.

Despite facing tight competition from these AI providers, Cursor's rising success is evident as it has crossed over $500 million in ARR. Its new challenge is to keep providing state-of-the-art AI models at affordable prices. This led Anysphere to strike multi-year deals with some big players and offer a $200 per month subscription plan. Yet, the tension between Cursor and AI model developers is escalating and it's uncertain how things will play out in the future.