3 ms·

As a user of Claude I have been worried about this.

mort96 9mo ago
As someone who can't stand these tools, I'm ecstatic. Y'all have been hooked by the early venture-backed "scale up at all cost" period. You're gonna get squeezed so hard once investors start demanding returns on their investments -- and this whole craze is, hopefully, coming to an end.
- dewey 9mo ago
  Maybe don't hold your breath on that. Even if the price for AI tools would double, or tripple...that's still a very small part of the actual cost of an employee.
  - mort96 9mo ago
    Sure, but employers will want a return on investment too. And productivity studies which aren't backed by these AI companies haven't exactly been promising. With how stingy some companies can be with the basics such as getting a laptop with enough RAM and drive space, a lot of the spending on AI tools for employees is clearly driven more by hype and the false promise of huge productivity gains than the normal expense approval process. And plenty of people get hooked on these tools through using them for free or almost-free in their spare time. Those people will balk at huge price increases.
  - kakacik 9mo ago
    ... and almost no company of any size above startup counts cost like that. But I agree no point holding breath, whether somebody jumps on wagon or not won't change if price per query doubles, either its this massive productivity increase where costs of llms are a rounding error in overall costs or it isn't.
    - therobots927 9mo ago
      I’m betting on “isn’t”
- adventured 9mo ago
  That's what people widely claimed about Uber: it was toast once the investor subsidies stopped. Now it's quite profitable. People will pay more. Claude Opus 4.5 is worth more than $20 per month, as is Gemini 3 Pro. These services keep getting better. Another three years of improvement, why shouldn't that command $30 or $40 instead? $20 is ~$10 in the year 2000 per the BLS inflation calculator (or $1.25 when priced in gold). Nobody would have thought that was expensive for such utility. These are inexpensive tools at present.
  - mrweasel 9mo ago
    I think you're ignoring that most users of AI currently aren't paying anything, nor would they. I believe the value of a Facebook user was $70 per year in 2023, for the US and Canada. Assuming that the AI companies could make twice that from ads, that's still only $10 - $12 per month, and even less in the rest of the world. Obviously there's going to be some business users as well, so they can cover some of the cost, but would also be responsible for a larger portion of the running cost. The question should be how many free users can the AI companies convert. The cost of an Uber has also gone way up, and they basically have a monopoly in many areas.
    - aoeusnth1 9mo ago
      The cost of free users is much lower because they are served lite models, hit quota limits quickly, and can't soak up tokens by using agents. The main capacity usage is from agent loops, which is universally behind a paid tier.
  - GoatInGrey 9mo ago
    At its worst, Uber had a net margin of -~60%. The AI labs are all running at least negative triple digit net margins, some running negative quadruple digit net margins. This is why AGI has been "forecasted" to death by the labs, because investors need the promise of infinite automation to stomach the losses. Anyway, in this instance, what you received for $20 in 2025 will run you somewhere in the range of $60-$90 in 2027/2028. In the interim, you will likely see that $30-$40 of service gets you what cost $20 in 2025. The most likely avenue for this will be reduction in subscription user limits, and for API customers premiumization through substitution. The latter being a situation where what would be the next Claude Sonnet model is now sold as Claude Opus, for example. The only way the math works for the consumer is if the user base has become dependent on the service instead of remaining in a conventional cost/benefit relationship.
- snapcaster 9mo ago
  You're likely going to stay seething for a while (even if bubble pops). the product market fit of these tools is so strong that companies paying tens of thousands per employee for them isn't really that big of a deal

As someone who can't stand these tools, I'm ecstatic. Y'all have been hooked by the early venture-backed "scale up at all cost" period. You're gonna get squeezed so hard once investors start demanding returns on their investments -- and this whole craze is, hopefully, coming to an end.

dewey 9mo ago
Maybe don't hold your breath on that. Even if the price for AI tools would double, or tripple...that's still a very small part of the actual cost of an employee.
- mort96 9mo ago
  Sure, but employers will want a return on investment too. And productivity studies which aren't backed by these AI companies haven't exactly been promising. With how stingy some companies can be with the basics such as getting a laptop with enough RAM and drive space, a lot of the spending on AI tools for employees is clearly driven more by hype and the false promise of huge productivity gains than the normal expense approval process. And plenty of people get hooked on these tools through using them for free or almost-free in their spare time. Those people will balk at huge price increases.
- kakacik 9mo ago
  ... and almost no company of any size above startup counts cost like that. But I agree no point holding breath, whether somebody jumps on wagon or not won't change if price per query doubles, either its this massive productivity increase where costs of llms are a rounding error in overall costs or it isn't.
  - therobots927 9mo ago
    I’m betting on “isn’t”
adventured 9mo ago
That's what people widely claimed about Uber: it was toast once the investor subsidies stopped. Now it's quite profitable. People will pay more. Claude Opus 4.5 is worth more than $20 per month, as is Gemini 3 Pro. These services keep getting better. Another three years of improvement, why shouldn't that command $30 or $40 instead? $20 is ~$10 in the year 2000 per the BLS inflation calculator (or $1.25 when priced in gold). Nobody would have thought that was expensive for such utility. These are inexpensive tools at present.
- mrweasel 9mo ago
  I think you're ignoring that most users of AI currently aren't paying anything, nor would they. I believe the value of a Facebook user was $70 per year in 2023, for the US and Canada. Assuming that the AI companies could make twice that from ads, that's still only $10 - $12 per month, and even less in the rest of the world. Obviously there's going to be some business users as well, so they can cover some of the cost, but would also be responsible for a larger portion of the running cost. The question should be how many free users can the AI companies convert. The cost of an Uber has also gone way up, and they basically have a monopoly in many areas.
  - aoeusnth1 9mo ago
    The cost of free users is much lower because they are served lite models, hit quota limits quickly, and can't soak up tokens by using agents. The main capacity usage is from agent loops, which is universally behind a paid tier.
- GoatInGrey 9mo ago
  At its worst, Uber had a net margin of -~60%. The AI labs are all running at least negative triple digit net margins, some running negative quadruple digit net margins. This is why AGI has been "forecasted" to death by the labs, because investors need the promise of infinite automation to stomach the losses. Anyway, in this instance, what you received for $20 in 2025 will run you somewhere in the range of $60-$90 in 2027/2028. In the interim, you will likely see that $30-$40 of service gets you what cost $20 in 2025. The most likely avenue for this will be reduction in subscription user limits, and for API customers premiumization through substitution. The latter being a situation where what would be the next Claude Sonnet model is now sold as Claude Opus, for example. The only way the math works for the consumer is if the user base has become dependent on the service instead of remaining in a conventional cost/benefit relationship.
snapcaster 9mo ago
You're likely going to stay seething for a while (even if bubble pops). the product market fit of these tools is so strong that companies paying tens of thousands per employee for them isn't really that big of a deal