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Comment by rrrrrrrrrrrryan | Hacker News Reader

OpenAI has already started degrading their $20/month tier by automatically routing most of the requests to the lightest free-tier models.

We're very clearly heading toward a future where there will be a heavily ad-supported free tier, a cheaper (~$20/month) consumer tier with no ads or very few ads, and a business tier ($200-$1000/month) that can actually access state of the art models.

Like Spotify, the free tier will operate at a loss and act as a marketing funnel to the consumer tier, the consumer tier will operate at a narrow profit, and the business tier for the best models will have wide profit margins.

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I find that hard to believe. As long as we have open weight models, people will have an alternative to these subscriptions. For $200 a month it is cheaper to buy a GPU with lots of memory or rent a private H200. No ads and no spying. At this point the subscriptions are mainly about the agent functionality and not so much the knowledge in the models themselves.

I think what you're missing here is most OpenAI users aren't technical in the slightest. They have massive and growing adoption from the general public. The general public buy services, not roll their own for free, and they even prefer to buy service from the brand they know over getting cheaper service from somebody else.

The conclusion I got from their comment was that the highest margin tier (the business customers) would be incentivized to build their own service instead of paying the subscription. Of course, I am doubtful that for the vast majority of businesses this viable/at all more cost effective when a service AWS is highly popular and extremely profitable.

H200 rental prices currently start at $2.35 per hour, or $1700 per month. Even if you just rent for 4h a day, the $200 subscription is still quite a bit cheaper. And I'm not even sure that the highest-quality open models run on a single H200.

Most? Almost all my requests to the "Auto" model end up being routed to a "thinking" model, even those I think ChatGPT would be able to answer fine without extra reasoning time. Never say never, but right now the router doesn't seem to be optimising for cost (at least for me), it really does seem to be selecting a model based on the question itself.

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