First: marginal inference cost vs total business profitability. It’s very plausible (and increasingly likely) that OpenAI/Anthropic are profitable on a per-token marginal basis, especially given how cheap equivalent open-weight inference has become. Third-party providers are effectively price-discovering the floor for inference.
Second: model lifecycle economics. Training costs are lumpy, front-loaded, and hard to amortize cleanly. Even if inference margins are positive today, the question is whether those margins are sufficient to pay off the training run before the model is obsoleted by the next release. That’s a very different problem than “are they losing money per request”.
Both sides here can be right at the same time: inference can be profitable, while the overall model program is still underwater. Benchmarks and pricing debates don’t really settle that, because they ignore cadence and depreciation.
IMO the interesting question isn’t “are they subsidizing inference?” but “how long does a frontier model need to stay competitive for the economics to close?”
But the max 20x usage plans I am more skeptical of. When we're getting used to $200 or $400 costs per developer to do aggressive AI-assisted coding, what happens when those costs go up 20x? what is now $5k/yr to keep a Codex and a Claude super busy and do efficient engineering suddenly becomes $100k/yr... will the costs come down before then? Is the current "vibe-coding renaissance" sustainable in that regime?
See people get confused. They think you can charge __less__ for software because it's automation. The truth is you can charge MORE, because it's high quality and consistent, once the output is good. Software is worth MORE than a corresponding human, not less.
The interesting question is if they are subsidizing the $200/mo plan. That's what is supporting the whole vibecoding/agentic coding thing atm. I don't believe Claude Code would have taken off if it were token-by-token from day 1.
(My baseless bet is that they're, but not by much and the price will eventually rise by perhaps 2x but not 10x.)
And why is that? Should they not be interested in sharing the numbers to shut up their critics, esp. now that AI detractors seem to be growing mindshare among investors?
There any many places that will not use models running on hardware provided by OpenAI / Anthropic. That is the case true of my (the Australian) government at all levels. They will only use models running in Australia.
Consequently AWS (and I presume others) will run models supplied by the AI companies for you in their data centres. They won't be doing that at a loss, so the price will cover marginal cost of the compute plus renting the model. I know from devs using and deploying the service demand outstrips supply. Ergo, I don't think there is much doubt that they are making money from inference.
Remember "worse is better". The model doesn't have to be the best; it just has to be mostly good enough, and used by everyone -- i.e., where switching costs would be higher than any increase in quality. Enterprises would still be on Java if the operating costs of native containers weren't so much cheaper.
So it can make sense to be ok with losing money with each training generation initially, particularly when they are being driven by specific use-cases (like coding). To the extent they are specific, there will be more switching costs.
My network largely thinks of HN as "a great link aggregator with a terrible comments section". Now obviously this is just my bubble but we include some fairy storied careers at both Big Tech and hip startups.
From my view the community here is just mean reverting to any other tech internet comments section.
As someone deeply familiar with tech internet comments sections, I would have to disagree with you here. Dang et al have done a pretty stellar job of preventing HN from devolving like most other forums do.
Sure you have your complainers and zealots, but I still find surprising insights here there I don't find anywhere else.
I've stopped engaging much here because I need a higher ROI from my time. Endless squabbling, flamewars, and jokes just isn't enough signal for me. FWIW I've loved reading your comments over the years and think you've done a great job of living up to what I've loved in this community.
I don't think this is an HN problem at all. The dynamics of attention on open forums are what they are.
You're too kind! I do appreciate that.
I actually checked out your site on your profile, that's some pretty interesting data! Curious if you've considered updating it?
Sometimes I wonder if we were right.
I haven't even gotten around to learning Golang or Rust yet (mostly because the passed the threshold of popularity after I had kids).
Welcome the singularity so many were so eagerly welcoming.
Complete the sentence: "Brilliant marathon runners don't run on crutches, they use their own legs. By analogy, brilliant minds..."
Don’t pander us, we’ll all got families to feed and things to do. We don’t have time for tech trillionairs puttin coals under our feed for a quick buck.
For the unaware, Ted Faro is the main antagonist of Horizon Zero Dawn, and there's a whole subreddit just for people to vent about how awful he is when they hit certain key reveals in the game: https://www.reddit.com/r/FuckTedFaro/
(Apologies for the spoiler of the 52 year old movie)
The project I'm working on, meanwhile...
1:55pm Cancelled my Claude subscription. Codex is back for sure.
On second thought, we should really not have bridged the simulated Internet with the base reality one.
so then they're not really leaving money on the table, they already got what they were looking for and then released it
Incredibly high ROI!
Anyways, do you get shitty results with the $20/month plan? So did I but then I switched to the $200/month plan and all my problems went away! AI is great now, I have instructed it to fire 5 people while I'm writing this!
... or 12B?