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Comment by cadamsdotcom | Hacker News Reader

200usd/mo for Claude gives me tens of thousands of dollars of value.

API prices are paid by companies getting tens of millions of dollars of value.

In normal life money is the key constraint; buy this don't buy that etc. - whereas in VC funded companies the constraint is time. If you as a founder get funding and don't spend it fast enough you put yourself at serious risk of being replaced.

When enough of the world operates on that principle it creates a highly price insensitive market and that then can support a ton of ideas and experiments, some of which turn out to be really really good. It's a wild way to do innovation but it's been working well for decades.

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It doesn't, though.

$200/mo of Claude may give you what would have cost tens of thousands of dollars to create in 2023, but the value of what it creates isn't there anymore. It should be compared against what it would cost to create with other tools, not against the cost of you doing it by hand.

Otherwise would be like justifying an obviously overpriced car, because "it saves me so much compared to carrying things thousands of miles by hand!"

Your comparison is wrong

It's not an expensive car vs. any car.

It's car vs. no car.

Is it? Because you can just download a car now.

No, you are wrong. Or at least, incomplete.

The comment I replied to said "I need Claude because it's better than no AI.

That's like saying "I need the Porsche because it's better than no car".

Making a "car vs no car" argument is not an argument for an expensive car. Making an argument for an expensive car, requires both car vs no car, and expensive car vs any car. This is what I was pointing out above.

My argument may be wrong, but I myself am just fine, thank you.

I don't know about that. There's something not quite right going on with you. The deliberate misunderstanding, the faux outrage..just fine, I doubt it.

Point taken & let's get back on track.

I agree it's incomplete what I wrote; you were right to call it out.

When you as an individual are getting tens of thousands of dollars of value from a $100 item and someone says there's a slightly-worse version for $1 but can't tell you if you'll find it slightly worse or noticeably worse.. you have to stop what you're doing to evaluate them, pay switching costs etc etc. so the cost difference is less than $99 and might actually be negative, and the difference in margin after paying switching costs is negligible.

So your rational response is to investigate to lower the stakes - but even performing the investigation eats into the time you're spending getting your tens of thousands of dollars of value.

It takes a big leap of faith for real companies with a real P&L to hand out token budgets in the thousands far and wide across their teams. The ROI is very easy difficult to demonstrate.

I've been thinking about it a lot and I think there's going to be commoditization of tokens. No local models - the hardware to run at scale is too complicated for companies that are reluctant to even run a local file server - and not wholesale run to Chinese suppliers (due to IP considerations mainly).

I think the winners in the coding/office work space will be intermediaries who can sell reasonable quality tokens at cost plus. It's the same reason "real" companies don't hand out their employees fully decked Macbook Pros or don't provide $500k TC packages as a norm: they are fine with "good enough" and "good ROI". And that's not going to happen with Claude API pricing where it is.

Another field is API pricing for things that are not coding, like automated systems doing analysis of things. I think there it's a real race to the bottom, including - or even mostly - direct sourcing from China (just like business do with their real goods today).

> 200usd/mo for Claude gives me tens of thousands of dollars of value.

That may well be true, but the same tens of thousands of dollars of value can be purchased for a fraction of the 200usd Anthropic asks.... therefore why not?

And even beyond pure monetary considerations, it often refuses to help as soon as its trigger happy safeguards kick in, can't debug a lot of code before it decides to stop helping IME.

It's less fungible than you think.

Below a certain threshold prices are effectively all the same.

Companies pay API prices because part of the bundle is a trust anchor / liability shield: "we bought Anthropic's thing! We didn't risk it! We paid for ZDR!"

paying for API calls gives you no such deal hack.

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