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Token growth indicates future AI spend per dev
- senko 1y agotl;dr > This is driven by two developments: more parallel agents and more work done before human feedback is needed.
- throwanem 1y ago"Tokenomics."
- TranquilMarmot 1y agoI studied this in college but I think we had a different idea of what "toke" means
- deleted 1y ago[deleted]
- throwanem 1y agoEh. The implicit claim is the same as everywhere, namely that that $100k/dev/year of AI opex is an enormous bargain over going up two orders of magnitude in capex to pay for the same output from a year's worth of a team. But now that Section 174's back and clearly set to stay for a good long while, it makes sense to see this line of discourse come along.
- jeanlucas 1y agoSo convenient a future AI dev will cost as much as a human developer, pure coincidence
- naiv 1y agoBut he works 24/7 at then maybe 20x output
- crinkly 1y agoLike fuck that's happening. Human dev will spend entire day gaslighting an electronic moron rather than an an outsourced team. The only argument we have so far is wild extrapolation and faith. The burden of proof is on the proclaimer.
- nicce 1y agoWhy we can’t keep the current jobs but accelerate humanity development by more than 20x with AI? Everyone is just talking about replacement, without the mention of potential.
- buzzerbetrayed 1y agoI'm not entirely sure I understand exactly what you're suggesting. But I'd imagine it's because a company that doesn't have to pay people will out compete the company that does. There could be some scenario where it is advantageous to have humans working with AI. But if that isn't how reality plays out then companies won't be able to afford to pay people.
- hx8 1y agoI don't think there is market demand for 20x more software produced each year. I suspect AI will actively _decrease_ demand for several major sectors of software development, as LLMs take over roles that were handled previously be independent applications.
- taftster 1y agoRight. This is insightful. It's not so much about replacing developers, per se. It's about replacing applications that developers were previously employed to create/maintain. We talk about AI replacing a workforce, but your observation that it's more about replacing applications is spot on. That's definitely going to be the trend, especially for traditional back-office processing.
- hx8 1y ago
- jgalt212 1y agoIt's sort of like how high cost funds net of fees offer the same returns as low cost ETFs net of fees.
- oblio 1y agoI'm not sure I understand this one.
- oblio 1y agoEven with the downvote, I still don't understand the logic of the original comment...
- mhh__ 1y agoHigh cost funds that will take your money perhaps (top funds are almost all capacity constrained, but will deliver a Sharpe of about 2 or 3)
- jgalt212 1y agoIt would be interesting to study the returns of funds not taking new investors and funds taking new investors that are run by the same manager. I bet there's quite a performance difference. One giant of the industry comes to mind.
- magicalhippo 1y agoSimilar to housing in attractive places no? Price is related to what people can afford, rather than what the actual house/unit is worth in terms of material and labor.
- maratc 1y agoExcept for "material and labor" there is an additional cost of land. That is already "related to what people can afford", in attractive places or not.
- thisisit 1y agoThis is just a ball park number. Its like the AI dev will cost some what less than a human developer. Enough for AI providers to have huge margins and allow for CTOs to say - "I replaced all devs and saved so much money".
- mattmanser 1y agoAnd then the CTOs will learn the truth that most product managers are just glorified admin assistants who couldn't write a spec for tic-tac-toe. And that to write the business analysis that the AI can actually turn into working code requires senior developers.
- eli_gottlieb 1y agoI mean, hey, rather than use AI at work, I'll just take the extra $100k/year and be just that good.
- insane_dreamer 1y agoThe full cost of an employee is a fair bit more than just their base salary.
- SoftTalker 1y agoWait until the taxes on AI come, to pay for all the unemployment they are creating.
- ponector 1y agoCost as US developer or Indian developer?
- boltzmann_ 1y agoAuthor just choose a nice number and give no argument to it
- mromanuk 1y agoProbably chose $100k/yr as an example of the salary of a developer.
- g42gregory 1y agoThis is why it’s so critical to have open source models. In a year or so, the open source models will become good enough (in both quality and speed) to run locally. Arguably, OpenAI OSS 120B is already good enough, in both quality and speed, to run on Mac Studio. Then $10k, amortized over 3 years, will be enough to run code LLMs 24/7. I hope that’s the future.
- okdood64 1y agoWhat's performance of running OpenAI OSS 120B on a Mac Studio as compared to running a paid subscription frontier LLM?
- andrewmcwatters 1y agoChiming in here, M1 Max MacBook Pro 64GB using gpt-oss:20b over ollama with Visual Studio Code with GitHub Copilot is unusably slow compared to using Claude Sonnet 4, which requires (I think?) GitHub Copilot Pro. But I'm happy to pay the subscription vs buying a Mac Studio for now.
- Jimpulse 1y agoOllama's implementation for gpt-oss is poor.
- jermaustin1 1y agoI will answer for the 20B version on my RTX3090 for anyone who is interested (SUPER happy with the quality it outputs, as well). I've had it write a handful of HTML/CSS/JS SPAs already. With medium and high reasoning, I will see between 60 and 120 tokens per second, which is outrageous compared to the LLaMa models I was running before (20-40tps - I'm sure I could have adjusted parameters somewhere in there).
- ivape 1y agoDo we know why it’s so fast barring hardware?
- typs 1y agoThis makes sense as long as people continue to value using the best models (which may or may not continue for lots of reasons). I’m not entirely sure that AI companies like Cursor necessarily miscalculated though. It’s noted that the actual strategies the blog advertises are things used by tools like Cursor (via auto mode). The important thing for them is that they are able to successfully push users towards their auto mode and use more usage data to improve their routing and frontier models don’t continue to be so much better AND so expensive that users continue to demand them. I wouldn’t hate that bet if I were Cursor personally.
- sovietmudkipz 1y agoWhat is everyone’s favorite parallel agent stack? I’ve just become comfortable using GH copilot in agent mode, but I haven’t started letting it work in an isolated way in parallel to me. Any advise on getting started?
- hx8 1y agoHow many parallel agents can one developer actively keep up with? Right now, my number seems to be about 3-5 tasks, if I review the output. If we assume 5 tasks, each running $400/mo of tokens, we reach an annual bill of $24,000. We would have to see a 4x increase in token cost to reach the $100,000/yr mark. This seems possible with increased context sizes. Additionally, we might see additional context sizes lead to longer running more complicated tasks which would increase my number of parallel tasks.
- mockingloris 1y ago[flagged]
- throaway920181 1y agoWhat does "Dey well" and "Yarn me" mean at the bottom of your comments?
- mockingloris 1y agoThey are Nigerian Pidgin English words: - Dey well: Be well - Yarn me: Lets talk └── Dey well/Be well
- nmeofthestate 1y agoOk, don't do that.
- SoftTalker 1y agoPlease don't use signature lines in HN comments. Edit: Would have sworn that this was in the guidelines but I don't see it just now.
- deleted 1y ago[deleted]
- AtNightWeCode 1y agoDon't know about the numbers but is this not the cloud all over again. Promises about cheap storage and you don't maintain it developed into maintenance hell and storage costs steadily rising instead of dropping.
- masterj 1y agoWhy even stop at 100k/yr? Surely the graph is up-and-to-the-right forever? https://xkcd.com/605/ https://xkcd.com/605/
- jjcm 1y agoAt some point the value of remote inference becomes more expensive than just buying the hardware locally, even for server-grade components. A GB200 is ~$60-70k and will run for multiple years. If inference costs continue to scale, at some point it just makes more sense to run even the largest models locally. OSS models are only ~1 year behind SOTA proprietary, and we're already approaching a point where models are "good enough" for most usage. Where we're seeing advancements is more in tool calling, agentic frameworks, and thinking loops, all of which are independent of the base model. It's very likely that local, continuous thinking on an OSS model is the future.
- tempest_ 1y agoMaybe 60-70k nominally but where can you get one that isnt in its entire rack configuration
- jjcm 1y agoFair, but even if you budget an additional $30k for a self-contained small-unit order, you've brought yourself to the equivalent proposed spend of 1 year of inference. At $100k/yr/eng inference spend, your options widen greatly is my point.
- whateveracct 1y agoThis is the goal. Create a reason to shave a bunch off the top of SWE salaries. Pay them less because you "have" to pay for AI tools. All so they don't have to do easy rote work - you still get them to do the high level stuff humans must do.
- turnsout 1y agoTools like Cursor rely on the gym model—plenty of people will pay for a tier that they don't fully utilize. The heavy users are subsidized by the majority who may go months without using the tool.
- crestfallen33 1y agoI'm not sure where the author gets the $100k number, but I agree that Cursor and Claude Code have obfuscated the true cost of intelligence. Tools like Cline and its forks (Roo Code, Kilo Code) have shown what unmitigated inference can actually deliver. The irony is that Kilo itself is playing the same game they're criticizing. They're burning cash on free credits (with expiry dates) and paid marketing to grab market share -- essentially subsidizing inference just like Cursor, just with VC money instead of subscription revenue. The author is right that the "$20 → $200" subscription model is broken. But Kilo's approach of giving away $100+ in credits isn't sustainable either. Eventually, everyone has to face the same reality: frontier model inference is expensive, and someone has to pay for it.
- fragmede 1y agoAlso frontier model training is expensive, and at some point, eventually, that bill also needs to get paid, by amortizing over inference pricing.
- cyanydeez 1y agooh go one more step: the reality is these models are more expensive than hiring an intern to do the same thing. Unless you got a trove of self starters with a lot of money, they arn't cost efficient.
- fercircularbuf 1y agoIt sounds like Uber
- patothon 1y agothat's a good point, however maybe the difference is that kilo is not creating a situation for themselves where they either have to reprice or they have to throttle. I believe it's pretty clear when you use these credits that it's temporary (and that it's a marketing strategy), vs claude/cursor where they have to fit their costs into the subscription price and make things opaque to you
- StratusBen 1y agoI started https://www.vantage.sh/ https://www.vantage.sh/ - a cloud cost platform that tracks Infra & AI spend. The $100k/dev/year figure feels like sticker shock math more than reality. Yes, AI bills are growing fast - but most teams I see are still spending substantially lower annually, and that's before applying even basic optimizations like prompt caching, model routing, or splitting work across models. The real story is the AWS playbook all over again: vendors keep dropping unit costs, customers keep increasing consumption faster than prices fall, and in the end the bills still grow. If you’re not measuring it daily, the "marginal cost is trending down" narrative is meaningless - you’ll still get blindsided by scale. I'm biased but the winners will be the ones who treat AI like any other cloud resource: ruthlessly measured, budgeted, and tuned.
- nunez 1y agoDude, thank you for this service. I use ec2instance.info and vantage.sh for Azure all of the time.
- oblio 1y agoIronically, except for Graviton (and that's also plateauing; plus it requires that you're able to use it), basically no old AWS service has been reduced in cost since 2019. EC2, S3, etc.
- StratusBen 1y agoLook at the early days of AWS vs recent years. The fact that AWS services have been basically flat since 2019 in a high-inflation environment is actually pretty dang good on a relative basis.
- oblio 1y agoConsidering the AWS profit margins I'm fairly sure there plenty more cost reductions that could have been passed along.
- mockingloris 1y ago@g42gregory This would mean that for the certain devs, an unfair advantage would be owning a decent on-prem rig running a fine tuned and trained model that has been optimized for specific use case for the user. A fellow HN user's post I engaged with recently talked about low hanging fruits. What that means for me and where I'm from is some sort of devloan initiative by NGOs and Government Grants, where devs have access to these models/hardware and repay back with some form of value. What that is, I haven't thought that far. Thoughts? └── Dey well
- IshKebab 1y ago> Both effects together will push costs at the top level to $100k a year. Spending that magnitude of money on software is not without precedent, chip design licenses from Cadence or Synopsys are already $250k a year. For how many developers? Chip design companies aren't paying Synopsys $250k/year per developer. Even when using formal tools which are ludicrously expensive, developers can share licenses. In any case, the reason chip design companies pay EDA vendors these enormous sums is because there isn't really an alternative. Verilator exists, but ... there's a reason commercial EDA vendors can basically ignore it. That isn't true for AI. Why on earth would you pay more than a full time developer salary on AI tokens when you could just hire another person instead. I definitely think AI improves productivity but it's like 10-20% maybe, not 100%.
- cornstalks 1y ago> For how many developers? Chip design companies aren't paying Synopsys $250k/year per developer. Even when using formal tools which are ludicrously expensive, developers can share licenses. That actually probably is per developer. You might be able to reassign a seat to another developer, but that's still arguably one seat per user.
- IshKebab 1y agoI don't think so. The company I worked for until recently had around 200 licenses for our main simulator - at that rate it would cost $50m/year, but our total run rate (including all salaries and EDA licenses) was only about $15m/year. They're super opaque about pricing but I don't think it's that expensive. Apparently formal tools are way more expensive than simulation though (which makes sense), so we only had a handful of those licenses. I managed to find a real price that someone posted: https://www.reddit.com/r/FPGA/comments/c8z1x9/modelsim_and_questa_license_price_too_expensive/ https://www.reddit.com/r/FPGA/comments/c8z1x9/modelsim_and_q... > Questa Prime licenses for ~$30000 USD. That sounds way more realistic, and I guess you get decent volume discounts if you want 200 licenses.
- yieldcrv 1y agoI think what this model actually showed is a cyclical aspect of tokens as a commodity It is based on supply and demand of GPUs, the demand currently outstrips supply, while the 'frontier models' are also much more computationally efficient than last year's models in some ways - using far fewer computational resources to do the same thing so now that everyone wants to use frontier models in "agentic mode" with reasoning eating up a ton more tokens before sticking with a result, the demand is outpacing supply but it is possible it equalizes yet again, before the cycle begins anew
- zahlman 1y ago> The difference in pay between inference and training engineers is because of their relative impact. You train a model with a handful of people while it is used by millions of people. Okay, but when did that ever create a comparable effect for any other kind of software dev in history?
- gedy 1y agoMaybe this is why companies are hyping the "replacing devs" angle, as "wow see we're still cheaper than that engineer!" is going to be only viable pitch.
- woeirua 1y agoIts not viable yet, and at current token spend rates, it's likely not going to be viable for several years.
- thebigspacefuck 1y agoNever heard of kilo before, pretty sure this post is just an ad
- lvl155 1y agoI’ve not heard either but now I am getting ads from them. I guess that was their plan.
- austin-cheney 1y agoThere is nothing new here and the math on this is pretty simple. AI greatly increases automation, but its output is not trusted. All research so far shows AI assisted development is a zero sum game regarding time and productivity because time saved by AI is reinvested back into more thorough code reviews than were otherwise required. Ultimately, this will become a people problem more than a financial problem. People that lack the confidence to code without AI will cost less to hire and dramatically more to employ, no differently than people reliant on large frameworks. All historical data indicates employers will happily eat that extra cost if it means candidates are easier to identify and select because hiring and firing remain among the most serious considerations for technology selection. Candidates, currently thought of 10x, that are productive without these helpers will continue to remain no more or less elusive than they are now. That means employers must choose between higher risks with higher selection costs for the potentially higher return on investment knowing that ROE is only realized if these high performance candidates are allowed to execute with high productivity. Employers will gladly eat increased expenses if they can qualify lower risks to candidate selection.
- jjmarr 1y agoYou're assuming it's a binary between coding with or without AI. In my experience, a 10x developer that can code without AI becomes a 100x developer because the menial tasks they'd delegate to less-skilled employees while setting technical direction can now be delegated to an AI instead. If your only skill is writing boilerplate in a framework, you won't be employed to do that with AI. You will not have a job at all and the 100xer will take your salary.
- oblio 1y agoThe thing is, the 100x can't be in all the verticals, speak all the languages, be a warm body required by legislation, etc, etc. Plus that 100x just became a 10x (x 10x) bus factor. This will reduce demand for devs but it's super likely that after a delay, demand for software development will go even higher. The only thing I don't know is how that demand for software development will look like. It could be included in DevOps work or IT Project Management work or whatever. I guess we'll see in a few years.
- zeld4 1y agogive me $50k raise and I need only $10k/yr. seriously, I don't see the AI outcome worth that much yet. On the current level of ai tools, the attention you need to manage 10+ async tasks are over limit for most human. In 10 years maybe, but $100k probably worths much less by then.
- chiffre01 1y agoHonestly we're in a race to the bottom right now with AI. It's only going to get cheaper to train and run these models as time goes on. Modes running on single consumer grade PCs today were almost unthinkable four years ago.
- 6thbit 1y agoAn interesting metric is when token bills per dev exceed the cost of hiring a new dev. But also, if paying another dev's worth in tokens getting you further than 2 devs without using AI will you still pay it? I wonder how the economics will play out, especially when you add in all the different geographic locations for remote devs and their cost.
- jjmarr 1y agoThey already do for anything not in Western Europe/North America.
- AstroBen 1y ago> charge users $200 while providing at least $400 worth of tokens, essentially operating at -100% gross margin. Why are we assuming everyone uses the full $400? Margins aren't calculated based on only the heaviest users.. And where are they pulling the 100k number from?
- daft_pink 1y agoIf you are throttled at $200 per month, you should probably just pay another $200 a month for a second subscription, because the value is there. That’s my take from using Claude.
- mwkaufma 1y agoTitle modded without merit.
- dcre 1y ago"The bet was that by the following year, the application inference would cost 90% less, creating a $160 gross profit (+80% gross margins). But this didn't happen, instead of declining the application inference costs actually grew!" This doesn't make any sense to me. Why would Cursor et al expect they could pocket the difference if inference costs went down? There's no stickiness to the product; they would compete down to zero margins regardless. If anything, higher total spend is better for them because it's more to skim off of.
- jvanderbot 1y agoIt's not hard to imagine a future where I license their network for inference on my own machine, and they can focus on training.
- oblio 1y agoThe problem with this is that the temptation to do more us too big. Nobody wants to be a "dumb pipe", a utility.
- jvanderbot 1y agoI don't understand the dumb pipe analogy. Sure they can sell a "cloud inference" as well, but it's way cheaper for them to license the model and let me run it. Let me decide. If I have hardware from a gaming addiction, or a privacy fetish, I'll pay $200/m to use it. But if I want to ramp up use, then maybe 100k/y is the price.
- oblio 1y agoData we send to LLMs is super valuable. Code bases, counseling (emotional, financial, etc). The temptation to monetize it in shady ways will be irresistible. And giving up control will reduce income sources.
- jvanderbot 1y agoWhat part of "run locally" (inference on my machine) did I misrepresent as "run remotely"? You're saying they'd never do it because they can (somehow) make it cost effective to buy a few new graphics cards for every user that signs up?
- oblio 1y agoYou would want them to strictly train models and then I guess give them away to you so that you can run them locally? If for free, won't happen, as I said, you'd just turn them into a dumb pipe. If paid, yeah, maybe that could work as they offload the compute, but then they would need to figure out how to push ads to you and probably also sell your data
- lvl155 1y agoWhat is Kilocode?
- tirumario 1y agoopen-source AI coding agent extension for VS Code
- ankit219 1y agoNo justification for a $100k number. For $100k a year or about $8k a month, you will end up using 1B tokens a month (that too a generous blended $8 per million input/output tokens including caching while the number is lower than that). Per person. I think there is a case Claude did not reduce their pricing given that they have the best coding models out there. There recent fundraise had them disclose their Gross margins at 60% (and -30% with usage via bedrock etc). This way they can offer 2.5x more tokens at the same price than the vibe code companies and yet break even. The market movement where the assumption did not work out was about how we still only have claude which made vibe coding work and is the most tasteful when it comes to what users want. There are probably models better at thinking and logic, especially o3, but this signals the staying power of claude - having a lock in, it's popularity, and challenges the more fundamental assumption about language models being commodities. (Speculating) Many companies woudl want to move away from claude but cant because users love the models.
- paulhodge 1y agoFyi Kilocode has low credibility. They’ve been blasting AI subreddits with lots of clickbaity ads and posts, sometimes claiming things that are outright false. As far as spend per dev- I can’t even manage to use up the limits on my $100 Claude plan. It gets everything done and I run out of things to ask it. Considering that the models will get better and cheaper over time, I’m personally not seeing a future where I will need to spend that much more than $100 a month.