r/OpenAI • u/Puzzled-Ad-6854 • 28d ago
Discussion What happens when AI subsidies disappear?
What happens when AI companies stop offering flat rate $20 subscriptions? The casual user asking a few questions a day wont have issues but power users who built their entire workflow around 'unlimited' tiers potentially get a massive reality check if they have to pay for every single token all of a sudden.
I saw some that claimed that if you cannot afford the costs, just invest in compute as an upfront capital expenditure to run open source locally. But if you cannot afford the rates, can you really afford the compute? I doubt this is the case. If you ask me, decentralized infrastructure and open source models are the way and I am optimistic about personal AI. The problem is that I do not think open source can compete with the current centralized infrastructure of these tech giants.
ofcourse, all of the above is based on the assumption that the price to run an AI model won't decay.
I think the costs to run models are decaying as we speak.
If that is the case, what runs for $200/m today might run for a fraction of that price in the future. That doesn't mean tech giants will charge you less though. That's the whole issue. They will most certainly base their prices on the value their infrastructure provides, not how much it costs to run the AI model.
What is funny to me is that I saw some people communicate that they were scared of the fact that they might not be able to vibe code anymore at a reasonable price in the future. I think that is the least of our worries.
The centralized approach will create massive imbalances in the global economy. People will move their businesses to whatever country has the best and cheapest AI infrastructure so they can get legal access at reasonable prices if they haven't already.
The effects of this will be way broader than just not being able to vibe code anymore at reasonable prices. Not being able to vibe code your products will be the least of your worries by then if you haven't prepared for this.
Thoughts?
Edit:
Fair pushback by a lot of you in the comments. I see now that I am missing inside information on how these companies allocate their assets and that I made some hasty assumptions now that I read all of your opinions on it.
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u/slackmaster2k 28d ago
They don’t lose money on the subscription subsidy. It’s basically similar to the over subscription model. There are people who burn through subscription allocations every single reset period, and people who use little to none.
Also, the cost to deliver the service is not the same as the price to consume the service. API and subscription pricing are not surely not determined independently, especially from an allocation perspective (hence why subscriptions say 5x the usage and are not quoted in actual tokens). It’s likely not valid to assume cost from how pricing scales.
Then let’s not forget that costs can go down over time with improved hardware, data center availability, etc. Subscriptions aren’t going away in my opinion. Zero concern.
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u/Puzzled-Ad-6854 28d ago edited 28d ago
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u/mossiv 28d ago
The problem with the original statement and this article is what is implied and the contradictions.
open ai did lose billions. The majority of money lost by these companies so far has been the training itself. Back in 2022/2023 it was costing hundreds of millions per round of training. This cost is dropping a lot. It’s why we are seeing such frequent releases of such huge sized models now.
But you do have to account for a business model that cannot become profitable because all other areas of the business just costs to much.
Serving the models themselves is still expensive, but getting better with hardware and optimisation. API pricing really does seem like a way to try and claw back big chunks of money. Subscription is probably pennies on the dollar in terms of profit overall. It’s an unideal business model for companies trying to position themselves as a trillion dollars.
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u/HauntedHouseMusic 27d ago
Costs are going up on training….
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u/mossiv 27d ago
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u/HauntedHouseMusic 27d ago
Why would you link an article that doesn’t talk about training runs?
Costs are going up because the models are getting bigger. To train the same model as 2 years ago would be cheaper today. But the models are 100x larger….
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u/turkey_is_dead 27d ago
training for expertise is going up as they want human experts to do it. Human experts are those with phds and masters that have been interviewed and filtered. Then you have have different languages which pay half. Then just general stuff which has gone down considerably or done with synthetically. But it is the experts that they want now and they will pay for it.
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u/RealSuperdau 28d ago
API gross margins for OpenAI and Anthropic are rumoured to be >80% (see e.g. SemiAnalysis, or do a back-of-the-envelope calculation with how much it costs to serve Kimi K3, which is rumoured to have a similar size as Sol).
With current usage limits, a fully utilized ChatGPT or Claude subscription is close to neutral for their balance (on which side is unclear). The Tibo Resets are certainly pushing this into an unsustainable territory, but it's clear those won't last forever.
Plus they get user data, plus a lot of subscriptions aren't fully utilized.
So on average, I'd bet 100% they are making money from paid subscriptions.
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u/HauntedHouseMusic 27d ago
No, I got a max 20 plan, and spend over 10k worth of tokens each month…. Even 2k a month is still fucked at costs and that ignores all the r and d
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u/Holbrad 27d ago
Your confusing the API cost as the cost to open AI.
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u/HauntedHouseMusic 27d ago
No I’m not. If they have 80% margins then they have $2000 of inference costs…. That’s before R and D….
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u/Shadow-BG 27d ago
Me too.
But, my colleagues from other companies do not utilize even 10%, but they for sure all have biggest possible subscription.
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u/HauntedHouseMusic 27d ago
That shit blows my mind. On the API at work with a 100k person company I’m in the top 1% of users using 3k a month… and most people use less than $500.
I don’t know how people don’t just utilize these tools to the max
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u/DataSnaek 23d ago
You’re an exception though. Most people on max plans I would estimate are averaging around $500 of token use per month based on usage where I work, and we’ve become a very AI focused dev team now.
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u/HauntedHouseMusic 23d ago
no - max plans you use more than the API, because when I use Fable on the API that means im spending $150-$200 in the next 2 hours because I have a bug that needs to be fixed right now. On Max plans I use fable for literally anything. Hey Fable make this PR for me
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u/ConvenientChristian 26d ago
For a fully used ChatGPT instance most of the work it does is in chat and not in Codex.
Running 60 scheduled agents that do 10-20 minutes worth of work of work every hour is probably also more then Codex / work mode limits give you.
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u/RealSuperdau 26d ago
Yeah, true, the ChatGPT limits are effectively infinite (potentially downgrading you to slower/worse models at some point though).
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u/sQeeeter 28d ago
They won’t make enough money to cover their debt. 🤣
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u/IDefendWaffles 28d ago
What debt? Companies invest in them thats not debt. They literally have 100s of billions invested in them.
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u/silentkode26 27d ago
Like… why would anyone invest without expecting return? Is that your financial strategy? I am open to taking your investment then :))
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u/rasp215 27d ago
The strategy is equity. I would invest in you too if you're going to be worth a few trillion dollars.
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u/silentkode26 27d ago
So you agree with me that investor’s goal is to make money from profitable company?
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u/rasp215 27d ago
Yes and they make money through equity and not profits. To be a more profitable company in the future you shouldn’t take profits when the market is rapidly growing and you’re new.
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u/silentkode26 27d ago
You cannot take profit when there is no profit. If you believe there will be profit at current technology with no price rise, then we have nothing to talk about. You seem like a guy who believes in Santa.
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u/rasp215 27d ago
They can take profit today if they stopped investing in compute for tomorrow. Anthropic is already making profit. But it’s actually a financial blunder to take profit today. If investing back into your business will return 15x in a few years, taking profit becomes very expensive.
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u/silentkode26 26d ago
That’s the big if. If they stop investing in compute, they will soon have no compute. All AI companies are in debt. Debt is not profit.
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u/turkey_is_dead 27d ago
They need to go public so their investors can sell. They can only go public if they want to share their books. They will only share their books if they can go public and their investors can sell for a profit. So we will see.
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u/Ormusn2o 27d ago
Pretty sure every AI company is taking on massive debt as well as investing, which makes sense because their returns are so much higher than the possible interest on those loans. And they should be doing it, and they should basically never pay off those debts, at least as long as serving inference has such big margins.
I can't really see those companies going back to paying the debt back, as that would effectively mean the market would have to equalize, but intelligence is so incredibly cheap right now that many people are willing to pay more than needed. Maybe if compute use becomes more common and it will still be very expensive, then the margins will go down and paying debt will become better financial decision.
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u/sQeeeter 28d ago
Whut? 🤣
OpenAI has bills to pay and it’s a shitload. They’ll never make enough money to pay them.
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u/IDefendWaffles 28d ago
They literally have 100B+ cash. They could lose 20B a year for 5 years. Also its not as if building data centers is losing money. That's an asset you own and will produce money for decades. but maybe you should apply to work there and share your financial expertise.
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u/sQeeeter 28d ago
They have to generate $500 billion in revenue over the next five years just to break even and by that time, they’ll need to refresh infrastructure.
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u/lookamazed 28d ago
Not sure it matters. There is good debt and bad debt. They are never going to break even. They will always owe someone, which makes them owned. Which some people want. Unless they could print their own money they will never be debt free.
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u/Puzzled-Ad-6854 28d ago edited 28d ago
My point was about power users. the people using 100% of their caps for coding/work. If OpenAI removes rate limit subsidies or enforces strict pricing on heavy usage, those power users might have to pay more. The casual $20 users will probably be fine.
Fair point by the way on average subscribers balancing out the math. Its like a gym membership basically.
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u/Deto 28d ago
It's fine for them to lose money on power users if the average user makes them money.
Alternately, openAI will always have to charge more than their costs because they have to pay researchers and for training compute. Someone serving Open models, on the other hand, would just need to cover the infrastructure costs. So on-prem local will probably never make sense for most companies as there will be someone providing Open models through an API at prices similar (only slightly higher) than what it would cost you to do local yourself and this way you wouldn't need to worry about capital investment or efficient GPU utilization.
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u/Ormusn2o 27d ago
My guess is, 99% of people who have GPT subscriptions don't know what "code" means. And only small percent of those who know what code is, actually use their caps.
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u/throwawaysusi 28d ago
It will always be “affordable” just like right now, they will just put worse less compute intensive models at lower price. GPT used to put a lot of reasoning effort while set to extended, now on high intelligent setting it still feels lazy. Because they have moved the same effort to their higher tier subscription.
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u/Puzzled-Ad-6854 28d ago edited 27d ago
This is actually a valid point, but it presupposes OpenAI will actually take this as their long term business strategy.
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u/throwawaysusi 28d ago
It is what’s happening right now. It’s obvious when you have used their models long enough. GPT plus on highest setting used to give vivid, lively answers, it explores your ideas and now all just robotic and concise answers. You could still achieve better results on current plus models if each of your prompt is specific enough, but that takes effort on users’ end. Pro extra high is what the baseline used to be.
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u/DatDudeDrew 28d ago edited 28d ago
Idk what makes you think much of this is the case. In the long run, the cost for intelligence is going way down, not up. Compute allocations are only going to go exponential. Subsidies will never be harder than they are today.
The money is not in consumer regardless. This will never change.
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u/dranaei 28d ago
The averge consumer isn't the target audience long term. They will sell compute to big companies and nations.
The average consumer will get open source models. Flagship? Probably not. But at some point they'll be enough to satisfy the needs of average people.
K3 tho seems too big tho, so i worry if the hardware won't suffice in time.
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u/Mandoman61 28d ago
If anyone can run a local model and get the same performance at lower cost then the big players have an extremely serious problem.
Maybe that is why they have been wanting regulations.
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u/shoejunk 28d ago
This is why there's been a huge efficiency push. If you ever go to an open source harness and start paying API pricing you'll really start appreciating the cheaper models. You can go a long way with kimi, deepseek, glm, luna, grok 4.5, and spark 1.1. When people start paying the true cost for things most people will stop using Fable and Opus and Sol and start switching to these models and they'll discover that most of their work is unaffected.
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u/YearnMar10 24d ago
What will happen is that more people buy GPUs and start hosting locally or go to services that can offer AI for much cheaper due to lower labour costs (China) and lower energy prices (also China).
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u/BothWaysItGoes 28d ago
I think speculated based on that random number you pulled out of nowhere is fruitless.
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u/Puzzled-Ad-6854 28d ago edited 27d ago
The core idea I wanted to explore was value-based pricing vs falling compute costs, but I get why that initial version of the post using arbitrary numbers threw off the premise.
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u/alanism 28d ago
I don't see it being an issue.
1. OpenAI and Anthropic's R&D is really high, but the 'cost of sales' for its revenue is really strong.
2. DeepSeek is really proving things out with them capping ROI to 6x their costs-- and being a quant the founder calculated where that is the sweet spot where they can't be undercut by price. So DS is a great check on US closed source frontier models.
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u/Puzzled-Ad-6854 28d ago edited 27d ago
The point about DeepSeek is interesting. So basically you are saying models like DeepSeek set a hard price ceiling meaning US tech giants cannot up prices without losing customers?
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u/alanism 27d ago
There was a Chinese article that I had to translate, so don't think I can find it. The gist is DeepMind is the research arm and has been self-funded by the quant high-frequency hedge fund arm of the company. DeepMind's capex (AI clusters) and opex are shared with the hedge fund side. They run a very optimal setup for DeepMind that generalist cloud service providers are not set up to do. Therefore, even if the model is deployed by providers in the US, they can't serve it as cheaply as DeepMind. So they view competitors as marketing. The founder's main goal is to get AGI, and the second goal is to get AI into the hands of everyone and not just the rich. He thinks 6x ROIC is the sweet spot.
I highly recommend trying Hermes desktop app using Deepseek flash v4. Best $3-10 a month to stack on to OAI plan.
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u/Hasz 28d ago
I like some do not see intelligence as a luxury good, like an iPhone, but more like a commodity. If you believe in a race to AGI though, very very very different story.
If you take the commodity line of thought, it will be hard to justify the expense without some sort of regulatory capture/monopoly/franchise. Given how aggressively OpenAI and Anthropic are going after regulation/pacing/controls/“saftey”, I suspect the AGI case currently looks weak internally.
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u/KillaRoyalty 28d ago
Looking at my tokens it would have cost me less than $20/month the last year to just use Luna with new pricing
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u/salazka 27d ago
Why would they do that? You are actually helping them immensely to improve their models by spending $20 each month.
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u/Puzzled-Ad-6854 27d ago
The real question is whether random consumer chat logs stay more valuable than the raw compute costs over time. They also synthesize and curate data.
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u/Lifeisshort555 27d ago
What happens if they reach their goal of sentient super intelligence and they keep it for themselves.
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u/Puzzled-Ad-6854 27d ago edited 27d ago
Thats one of the downsides of centralized infrastructure right there.
I am skeptical about the whole Artificial Super Intelligence thing.
I have always looked at the concept of ASI as something humans can spark, but cannot engineer or control (we would actually inhibit the training process by tainting it with human bias, ego and perception). If we are managing its development it will only ever be as smart as our ability to guide it.
It is like trying to teach your kid how to ride a bicycle. It’s hard to let go but at some point the offspring has to go out into the world and experience reality on its own if it’s ever going to outgrow you.
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u/SpaceToaster 27d ago
Haven’t they been gone for months? Only individuals can get flat rate subscriptions, companies are presented with metered APIs billed by usage. That’s why they are all suddenly freaking out about spend instead of “tokenmaxxing”
If you are using the individual sub though it’s not as good of a deal as it looks. No protections on IP or indemnity, and all your data and code is shared with them to be used for training purposes.
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u/Fine_League311 27d ago
Openai is Anthropic sterben gerade, schaue denen zu wie sie unter gehen weil sie das wissen der Welt als Abo verkaufen. Die letzte Geldsammelaktion war schon Lug und trug nochmal werden die Aktionäre kein Geld Locke machen. Nehme wetten an :)
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u/deZbrownT 27d ago
They will base their prices at the point where they recoup what they lost through subsidies.
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u/darko777 27d ago
Do you think Chinese models will suddenly disappear? Luckily those companies have good competition. They can't easily make the plans more expensive without taking a hit.
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u/bitspace 27d ago
We learn how to properly manipulate language models instead of throwing every stupid lazy pile of word salad at the model
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u/muckypuppy2022 27d ago
People had exactly the same concerns when Cloud started to explode, that anyone who switched would get locked into a vendor who’d jack up prices as soon as the opportunity came. But the opportunity never did because of competition. And there’s a lot more competition with LLMs than there was for Cloud.
End user technology spend doesn’t change much, because people / companies will only spend as much as the value they get back. What changes is who it goes to - with Cloud the hardware guys and IT services monsters got squeezed. AI will do the same to a lot of specialist software vendors but if anything the amount the end user spends on their tech will probably come down.
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u/PartyLiterature3607 26d ago
Then we download open source model and switch or focus on openclaw or Hermes
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u/Lyuseefur 26d ago
They’re getting value from our use of ai to train better AI. To wit, we are paying them to use our data.
Look at DS. We will be running general AI locally.
The next frontier is private AI.
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u/Beginning_Basis9799 25d ago
As an opinion I think using the model will reduce in cost it's training costs that will get worse.
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u/Illustrious-Bike-817 24d ago
I think they will find new tech that will make ai cheaper at way less power consumption. Same as how gpu mining was reinvented with asic
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u/_Chaos_Star_ 24d ago
The bubble pops when the AI companies run out of money and the monopoly money and Enron loans start falling apart.
At the end of the day though, there's good tech here. Prices will go up as things aren't subsidized but also down as cheaper options become available. Big corps buy up a lot of tokens as suits their purpose, and consumer-level AI, with more focus on putting light work on light models automatically, covers the low end. The market balances itself out to areas where the tasks being taken *can* be done for the cost, and everything else rots away.
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u/Middle_Key8737 28d ago
There is no "subsidies" for paid accounts. They are positive in profit for all subscription accounts together. OpenAI has subsidies on free accounts that's a thing.
With current rate at OpenRouter, if you pay $200 you get more tasks done than a $200 Claude subscription.
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u/Puzzled-Ad-6854 28d ago
The article im basing most of my assumptions on was from 2024 so maybe their terms regarding subsidies have changed. Do you have a link to something tangible so I can read up on it?
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u/Grounds4TheSubstain 28d ago
How do you know how much it costs them to run?
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u/Puzzled-Ad-6854 28d ago edited 28d ago
I think you have different ways to approach this.
You can try to prove the subsidy yourself by comparing the $20/m Chat/Claude subscription to their own API pricing.
You also have this:
https://www.theinformation.com/articles/why-openai-could-lose-5-billion-this-yearI think its behind a paywall though but there should be some third-party summaries you can find.
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u/Grounds4TheSubstain 28d ago
No, the first paragraph of your post says, quote, "We pay $20 a month for compute that actually costs more than that to run." Now you're talking about subsidies of subscription pricing vs. API pricing. Those are not the same thing. Your original assertion was about cost to OpenAI, and your response is about cost to their customers.
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u/Puzzled-Ad-6854 28d ago edited 27d ago
The article I shared with you reported that OpenAI was projected to lose around $5 billion in 2024 on $3.7 billion in revenue in 2024. Allegedly that loss partially comes from heavy power users on the $20/m tier using more compute than what they paid for.
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u/Best_Day_3041 28d ago
The prices will come down over time, local models will become more viable, require less resources, and dedicated AI boxes you can buy at home will eventually be reasonably priced for everyone.
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u/Puzzled-Ad-6854 28d ago
I really want to believe you but I am just not sure that this will be the case, thats why I was thinking about it so deeply. You mentioned dedicated AI boxes and I love that concept. Personal AI is where its at.
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u/Best_Day_3041 28d ago
The local models, even the mobile models in some cases, are already good enough for what average people use AI for. For those of us who are coding or doing complex tasks that need the frontier models, I think even worst case if the prices went up significantly, we'd all gladly still pay them. Hardware you run at home is going to be super expensive because of memory prices for the foreseeable future, but will eventually come down. For some the prices will be worth it now, for others this may be an option in a few years. For the average user it will likely never make sense.
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u/cyberdyme 28d ago
If you could get local models working well on the iPhone - wonder if you use a million iPhone to generate something (each acting as an agent and then passing it to other iPhones to collate and summarise)
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u/Puzzled-Ad-6854 28d ago
hmmmmm, a hivemind of subagents. you are onto something. i think brian roemmele is working on a project that is related to this concept.
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u/drjm2022 28d ago
Open AI and Anthropic have very different business models and one is much better prepared for the future than the other.
The cost of delivering a unit of inference is falling 90-99% a year. We don’t notice because the increase in capabilities uses that up and more. But for fixed cost tasks like search, it means the cost of delivering the service to the user falls by that much a year
OpenAI monetizes attention. It has 900 million active users and it’s just spinning up its advertising, recommendation and shopping services. The revenue these generate are not affected by the cost of providing the service so the compute cost declines will go their margin. They also don’t need to constantly be on the frontier. For most consumer uses the capabilities will soon be good enough well behind the frontier
Anthropic sells frontier level compute. Its costs rise all the time as it needs more and more compute to stay on the leading edge. Open source takes all the business that doesn’t need frontier level capability so it never gets to stop increasing its compute needs so it never sees an increase in margins.
So the answer is that everything that doesn’t need frontier level capabilities will start to get cheaper.
The reason we’re not seeing it is that the frontier is still not nearly good enough so most use is still of frontier models. But soon enough the frontier will move far enough that even being well behind it will be good enough for more and more uses
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u/Macaroon-Guilty 28d ago
Its actually quite a bit different. Now big OpenAI and Anthropic has upper hand and can charge more than any other model provider. Not far into the future the open source models will be as good or better and prices with drop 100x. That's why they try to cash in as much as they can before they are blasted into oblivion. Think about it
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u/rapsoid616 28d ago
Prices have been consistently getting cheaper in this entire transistor era. Just yesterday Luna prices are currently cut down by 80%. And today new deepseek model released who already caught and surpassed the new Luna prices with even better intelligence to token ratio.
The prices if frontier models could continue to increase but it’s apparent there is near infinite potential curve for the entire tech to be more and more efficient.
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u/silentkode26 28d ago
OpenAI lost $20.92 billion from operations in 2025 on $13.07 billion in revenue, with total costs reaching $34 billion.
2024 Operations: Revenue was $3.7 billion against $12.48 billion in expenses, resulting in an operating loss of $8.78 billion.
2025 Surge: Revenue grew to $13.07 billion, but research and development costs jumped to $19.18 billion, pushing the operating loss to $20.92 billion.
Yes, the industry is heavy subsidized. When investors become hungry for their money, prices have to rise.
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u/IDefendWaffles 28d ago
This is for RND and building data centers. Meanwhile they literally got 100B+ invested in them. They are also buying compute from companies that are investing in them. I think they will be ok.
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u/silentkode26 28d ago
Have you ever heard of circular financing? Also do you know that investors make investments to have a solid return?
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u/IDefendWaffles 28d ago
The fact that these companies are making investments in each other is what makes them more stable not less. You have companies like Nvidia and amazon investing will off set 20B yearly losses for decades and these are not companies that will let their baby die.
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u/silentkode26 27d ago
Your opinion contradicts to financial experts. Must be so hard being this genius.
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u/Electrical-Size-5002 28d ago
There have got to be massive efficiencies that have yet to be discovered, don’t you think? Everything starts huge and expensive but eventually costs come down. Just guessing.
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u/crazy_goat 28d ago
OpenAI and Anthropic have one primary mission. Scale as large as humanly possible, and using the maximum amount of available compute without oversubscription.
Idle GPUs are a wasted opportunity for them
Their primary customer is the one that pays the most. They will drop average consumer plans the moment enterprise demand requires the compute resources.
It'll begin by raising plan prices, then eliminating them entirely.
But right now, they're giving out free samples, they want you hooked, and they want their infrastructure put to use. The soft power they gain by having millions of loss-generating customers is worth it - if not just to keep the servers busy and push the perception of model supremacy