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Comment by solenoid0937 | Hacker News Reader

I hope everyone recognized the cheap tokens as a transparent ploy to gain more users before jacking up prices. This was obvious from day one.

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Your cheap cynicism makes OpenAI's lower prices sound like a reason to avoid using them, but that's backwards! It's a better strategy to use them now while prices are low and switch later if necessary. Nobody knows who will have the best prices later, so better to decide later.

It’s good to be aware when you’re buying something that’s subsidized. No need to downplay the importance of awareness.

Aware of what, though? We don't actually know OpenAI's profit margins on inference. Do we need to know?

It's enough to know that the market is competitive and new models with better prices are released often. This means you should have a way to switch models.

The entire market is subsided more than it is competitive. The market wouldn’t exist the same as it does today if it weren’t being propped up. Thats the point.

I remember the days when I had a $2000+ credit balance on Uber because I mastered their referral program. “Free” uber blacks for 2 years!

When you’re using free shit that you should probably be paying more for, it’s good to not fool yourself.

In the Uber example, the fact that Lyft also existed at the time didn’t matter to me as someone happily riding around the city in Uber Black for $0. Unfortunately Lyft’s referral program wasn’t so lucrative so I couldn’t switch…

How does this work with inference providers behind OpenRouter? Are you saying that all of them are actually losing money?

Where can I sign up for a monthly subscription on OpenRouter instead of paying the real API price?

Openrouter is not so open as well, right? They take the middle man cut by enforcing their own limit restrictions and 429s on top of the model provided limit restrictions and what not.

Now why would I pay a middle man anything if I can get the same hosted model without their own whimsical service limits?

To the extent that the 3rd party inference resellers are a viable market because of Chinese/certain US AI labs (current) willingness to absorb substantial compute/R&D/data harvesting costs while releasing weights on permissive licensing terms for free, then yes, current pricing is distorted.

> Are you saying that all of them are actually losing money?

Are you saying these companies are operating on anything resembling a sustainable business model?

I think not!

If OpenAI needs to impose 5 hour limits during a time where they are aggressively trying to grow market share, what do you think they (or whatever the winning provider is) will do in 5 years once they IPO and need to boost margins?

They won’t be as friendly with usage caps as they’re being now.

`needs to impose 5 hour limits ` I'm no OpenAI defender but that's like saying Apple is going bankrupt because they charge for their products. Why wouldn't they do everything they can to turn $20 users into $200 users?

Exactly. It is common knowledge that all the AI companies have terrible margins. IMO tokens are the cheapest they'll ever be as these companies compete for users.

Uber isn't a good comparison. LLMs are a national or global market, not a local one. Also: already driverless.

Aware that this is essentially a soon to be deprecated service. As any vendor you need to know the life expectancy of it, plus forecast/predict any pricing changes. You really do not want to become dependent. Even if competitors exist, there still some non trivial cost to switch

My cost to switch is choosing a different model from a pulldown menu.

Aware that the rug will be pulled. The market runs at a loss

agree and underscores the idea that you should keep your setups portable between model providers by using external memory systems and connector gateways

Only if switching costs are low. If you are investing in the platform and integrating deeply, then planning to switch may not be a good plan.

I hope everyone recognizes they aim to make you dependent on their intelligence rather than your own.

I reject your intelligence and substitute my own?

There's an escape valve: I've had Claude stand-up AI-enabled features in my app, so we're much less dependent on Claude itself. The app uses cheap API calls to check code quality and run other "lessons learned" sweeps. Some of these become regular code in the end as well.

Same. Claude "loves" writing tools to make checks deterministic so much that I actually have to pull it back sometimes and point out that some things need to keep using LLMs. But even then, I have it "farm out" a lot of things to scripts using dirt-cheap models for things I don't need a Sonnet or higher level model for as well. The proportion that runs on the SOTA models keeps dropping.

But there's open models that are (pessimistically) 1 year behind? It's not like if openai decided to rugpull everyone, we'd be going back to writing code by hand and all the developers who forgot how to fizzbuzz would be screwed.

Open models still need compute.

Open AI rents compute. It seems unlikely given the huge investments they have already spent that they can profitably match someone who is just selling GPU time.

Open weight models are way closer to frontiers than that

> we'd be going back to writing code by hand

Well, as as SWE who writes code by hand and has no intention to outsource their intelligence to any entity, I felt slightly offended by "back".

Are you a member of a team? Then you are the outsourced intelligence. Your manager is not writing everything by hand, they are outsourcing it to you. Just understand that may change (I mean I am already mentally prepared for it to be a thing of the past within years). If you are purely writing software for hobby/fun then disregard, nothing will stop you from doing that.

I have no problem with other people outsourcing their intelligence to me, I've been doing this for years. But I prefer not to outsource my intelligence, at least not for things I care about, for various reasons.

Do you use an operating system? What about databases? Or the myriad of other software used which we build upon. I can't imagine a professional coding context where we don't outsource intelligence to some degree, if not a major degree. We stand on the shoulders of giants as they say.

It's not a problem at all. It's only for the things I care about and I consider important for a couple of reasons (maintaining and developing mental models etc.).

An open model is not your brain.

Or more efficient models/faster hardware close the gap between here and profitability.

I wouldn't be surprised if every $10 you add to the subscription cost halves your audience.

That boils down to who the customers for ChatGPT really are. $10 isn't going to make a difference for those who already pay, because they are basically pro-consumers. OpenAI might deliver enterprise solutions for large companies, but those deals are besides the per month subscriptions on the website.

For ChatGPT I really only see two customer groups, pro-consumer and small and medium enterprise. The entry level are just going to use Google/Gemini for the most part, or some ad supported ChatGPT tier. There's no price low enough to make the entry level, average consumer pay for an AI service. These are people who will not pay for search, email and social media. They only pay for streaming because there's no way around it.

Ok half was an exaggeration, but I think $10 might make quite a lot of them jump to Claude. Or DeepSeek. Remember, we're talking about a global user base here.

I settled on GPT Plus/Codex for my own work, while my employer settled on Claude on Bedrock (where I am, according to their metrics, using about $20 of compute a day, so I can believe that GPT Plus is a loss-leader). If I hit too many 5-hour timeouts I'm not jumping to Pro I'm jumping to Claude.

(Funnily enough, I just hit one. It'll reset in... three hours. I wasn't even hammering it, just writing some tests. I think I'm gonna just go reactivate my Anthropic account for a month).

I'd agree that $10 can and will make users switch to a different provider. Just as streaming music services are all price basically the same, as to avoid users just jumping to the cheapest, I think the AI companies will find a suitable price point for consumer AI. After that they'll just settle into a system where when one raise or lower their price, the rest will follow.

Those who benefit from using and LLM will continue to pay for one, regardless of provider, regardless of the price being $20 or $50.

The global aspect is interesting, because $50 is a lot of money for most of the global population. The AI advocates claim to be getting more hundreds, if not thousands, of dollars of value from their subscription. In the poorest countries that should make an even greater difference, but that assumes that they can get those first $50 and that the value is actually being generated.

Your intelligence is good, but mine is better. They could easily raise their prices until their user base falls to zero, and the offer steep discounts, but then... so could everybody else. We need to pimp all the speculators until they are bankrupt. Welcome to web 4.0b. "We will bury you."

It was obvious indeed, but damn does it feel good to have ridden the May 25 - Aug. 26 gravy train.

Now, let's see how the Anthropic IPO goes.

I'm going to predict: soft, below first-trade price at 180d from IPO date.

Or to just give users enough usage to find categories in which it is useful for them.

I pay the $200/mo., and don’t regret it for an instant - I have a project manager, an executive assistant, a business analyst, a software developer and an international accountant, for an absolute song.

you’re using an LLM as your international accountant? And brag about it online? That’s definitely a choice

As long as there is no path to profitability going from subsidized to fully paid tokens we are making them lose money.

This is not entirely true, you are costing them in the short run, but are growing your dependence on their product and feeding them training data.

Their goal is to create AGI and replace humans with something resembling the plot of Horizon Zero Dawn and its sequel but more extreme.

That's their goal but if they fail we got LLMs "for free".

They won’t be able to. Open models exist and run on a Mac you can buy now or in October.

The audience for this sort of thing is currently quite limited. It may grow more in the future, especially if prices get out of control, but for now, it's a relatively small subset of people.

please point me to an open model, that matches astra even on low reasoning, and runs on a mac

No problem, but you'll need to wait a few months

Why would it need to match Astra?

Software companies don't give up and fold because they can't hire one of the five best engineers in the world.

What kind of nonsense argument is this

Sorry but this is a pretty delusional take. No, you cant run the same level or even close to that level of model on a mac, not even on a 512gb studio. You can run good models sure, but not models anywhere close to the capabilities of these ones yet, despite what idiots on Twitter keep spouting.

The "run locally" thing is a red herring. The fact that anyone can be an inference providers and offer them as a service is what we need to focus on. If they are "good enough" then market forces will stop Anthropic/OpenAI from charging monopoly rents.

It is really about data. The endgame is not about hoping devs give them money.

More data isn't helping much, if Astra is any indication.

This is just you putting your head in the sand while you gradually automate your job.

I've spent my entire career trying to automate my job.

(I get what you're trying to say, I'm just finding the irony amusing).

What are they going to do with that data? Is it ads again?

You are about to get replaced.

That's happening anyways, they don't need more organic data for that.

Also, who cares? Such is the price of progress, I'm not selfish enough to hold humanity back because "muh job"

That's great. We are obviously both privileged enough to think that. Not so great for others.

They'll get through it. You don't just halt progress because the transition will be rough. We'd be pre-industrial if we thought like this.

Probably not, but I can channel my inner Scotty Fairno https://www.instagram.com/reel/DUbMs8Vipp5/

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