> What? If someone builds something on top of your API, they're tying themselves to it, and you can slowly raise prices while keeping each increase well below the switching cost.

That's not really how the LLM API market works. The interfaces themselves are pretty trivial and have no real lock-in value, and there's plenty of adapters around anyway. (Often first-party, e.g. both Anthropic and Google provide OpenAI-compatible APIs). There might initially have been theories that you could not easily move to a different model, creating lock-in, but in practice LLMs are so flexible and forgiving about the inputs that a different model can be just dropped in an work without any model-specific changes.

> 80% margin on GPU cost? What about after paying for power, facilities

The market price of renting that compute on the market. That's fully loaded, so would include a) pro-rated recouping the capital cost of the GPUs, b) the power, cooling, datacenter buildings, etc, c) the hosting provider's margin.

> admin, support, marketing, etc.? Are GPUs really more than half the cost of this business?

Pretty likely! In OpenAI's leaked 2024 financial plan the compute costs were like 75% of their projected costs.