[fontain]

No, we know from the financials of these companies that API prices are close to being at cost and the individual developer plans are heavily subsidized (because they are roughly 10% of API cost per token[1]).

If plans were at cost and API pricing was marked up that would mean there’s a 90%+ profit margin on tokens and instead of raising money and talking about revenue, Anthropic and OpenAI would be talking about their obscene profits.

[1] the caveat is that the average plan user probably doesn’t use all of their quota, I guess maybe 30% is the average across all users.

[sothatsit]

This completely ignores all the other huge costs the AI labs are paying in data center builds, researcher salaries, experiments, and training models.

The fact that Anthropic is rumoured to have a profitable quarter indicates that their margins on API priced inference are very strong.