Just a few years ago this was the standard business model for startups: attract VC money, offer plans at a loss, capture a huge market, boil the frog with incremental price increases to become profitable.
Companies like Uber wouldn't have been anywhere near as successful if they had been forced to make a profit from day one.
Raising prices is a bad strategy if you have a smaller base that costs enormously larger. "A million users that cost $1 and one user that costs $10 million, charge everyone $10 equilibrium", you're screwing over almost all of your users. The $20/month sub price is basically just not trying to capture the openclaw users.
ToS is the right knob here. When 0.05% of your customers use your product in a way that increases your costs 10,000%, you find ways to stop that. You don’t amortize the cost increase across everyone else.
If they are losing money then it's not priced correctly. That's what I responded to.
Yes, subscriptions work as you say. Plenty of people under utilize subscriptions from prime, to credit cards, to netflix. But if they lost money overall, they too would raise prices. Because that's how economics works. Shortage of capacity, high demand, raise prices until equilibrium.
There's other knobs beyond ToS. They just didn't choose those options.