AI Use Is Rising in Small Businesses – But Budgets Are Tight

Generative AI is making its way into small businesses, but many aren’t paying much to use it. A new survey reveals an interesting split: growing adoption, paired with minimal spending. Could this undercut Big Tech’s revenue expectations?

The Latest From U.S. Bank’s Survey

A recent U.S. Bank survey of 1,000 small business owners shows that 36% already use generative AI. Another 21% expect to start within the next year. That means over half of these businesses could be using GenAI tools by the end of 2025.

However, most are sticking to free or low-cost plans. Among those already using generative AI, 68% say they spend under $50 per month on these tools.

The survey defined “small business” as companies with less than $25 million in annual revenue and fewer than 100 employees. That captures a large portion of the U.S. market — from mom-and-pop retail to small tech consultancies.

Despite industry buzz, companies like OpenAI, Google, and Anthropic may not see immediate gains from this segment. Many small business users are still experimenting, not committing to premium features or enterprise-level tools.

This isn’t new for tech. The “free tier first” model has long been a standard play: offer value upfront, convert later.

AI vendors are betting that entry-level use will translate into long-term subscriptions, but that remains to be seen.

 The Bigger Picture: What That Means for AI Platforms

The takeaway here isn’t that small businesses don’t value AI. It’s that they’re cautious about ROI. Unlike enterprise clients, they’re less likely to pay upfront for tools they haven’t deeply tested.

This budget behavior could slow short-term revenue growth for AI platforms, even as adoption metrics rise. It also creates a potential strain on support and compute infrastructure if free-tier users continue to scale.

For startups targeting small businesses, the message is clear: monetization will take longer, and value delivery must be immediate.

Still, if history repeats, many of today’s low-cost users could convert — especially as AI tools prove business impact in sales, marketing, or operations.

GazeOn’s Take: Where It Could Go From Here

AI toolmakers may need to revise their expectations around the small business market. Usage is up, but margins are thin — for now. Success will likely come down to how well platforms can convert utility into urgency.

Reader Question

Would you pay for AI tools in your small business, or stick with the free tier?

About Author:

Eli Grid is a technology journalist covering the intersection of artificial intelligence, policy, and innovation. With a background in computational linguistics and over a decade of experience reporting on AI research and global tech strategy, Eli is known for his investigative features and clear, data-informed analysis. His reporting bridges the gap between technical breakthroughs and their real-world implications bringing readers timely, insightful stories from the front lines of the AI revolution. Eli’s work has been featured in leading tech outlets and cited by academic and policy institutions worldwide.