• AI coding tools set to outcost developer salaries by 2028
• Usage- and out-come based token pricing to blame
• Software vendors don't currently provide enough visibility

Gartner predicts that AI coding tools could cost more than the average developer's salary by as soon as 2028, driven by both an increased volume of license fees and growth in token consumption as vendors shift to usage- and outcome-based pricing.

With every code generation, refinement and debugging exercise consuming tokens, organizations are ending up paying a premium to use productivity-boosting AI.

And analysts are warning that many companies significantly underestimate how quickly token usage grows once AI coding becomes commonplace.

AI coding is more expensive than paying a developer

"Software engineering leaders are increasingly concerned as token-driven AI spend becomes harder to justify, with budgets often being depleted earlier than expected," Senior Principal Analyst Nitish Tyagi explained.

This comes as businesses shift from pilots to widespread deployment, and more developers become reliant on AI as part of their daily workflows.

While companies face higher costs, they're ultimately rewarded with higher outcome. Developers cite faster delivery, convenience and better code generation as core benefits, and they're now unlikely to voluntarily reduce token usage if it means they'd slow down.

"Token discipline will not emerge through developer choice alone, as developers tend to optimise for speed and convenience over cost efficiency," Tyagi added, noting the need for organizational governance.

The report also reveals some industry shortcomings; specifically, that vendors don't provide enough visibility into how tokens are counted. As a result, companies struggle to predict how much they're going to spend and optimize usage accordingly.

Until now, AI has grown its reach across coding, but soaring costs could change things as companies scale back to hit the sweet spot, keeping costs under control and protecting human roles.

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With several years’ experience freelancing in tech and automotive circles, Craig’s specific interests lie in technology that is designed to better our lives, including AI and ML, productivity aids, and smart fitness. He is also passionate about cars and the decarbonisation of personal transportation. As an avid bargain-hunter, you can be sure that any deal Craig finds is top value!