4 ms·

The bundle only works if it’s +EV for them. A lot of analyses (though not all - it’s complicated) say that the $200/mo bundle (and certainly the $20/mo bundle)

The bundle only works if it’s +EV for them. A lot of analyses (though not all - it’s complicated) say that the $200/mo bundle (and certainly the $20/mo bundle) costs more than that for most users, and the bundle is currently a loss leader. If so, then eventually prices will need to go up, and API per usage pricing will seem much more attractive.

zdragnar 8mo ago
Even if it more expensive, people will prefer subscription pricing over pay per use. When you ask it to do something and it goes off the rails, the payment plans have wildly different effects: Subscription- oh well, let's try again with a different prompt Pay per use- I just wasted money, this product sucks Even if it is less common than not, it has an outsized impact on how people feel using it.
- msh 8mo ago
  And it also caps your maximum expenses. A subscription user don’t have to worry something goes wrong and end up with a huge bill.
  - gbear605 8mo ago
    At least theoretically, the bill would work on a “wallet” system, where you fill up your account with $X every month, and then you’re charged per use. That keeps there from being a huge bill, worst case you’re just on hold until the next fill up.
dakolli 8mo ago
I'm not going to say what platform but it's an agentic coding tool, I know for a fact the platform loses in the mid $200.00s on a $20.00 plan. 10:1 loss leader for customer acquisition is crazy, and they'll have to make that up in the future somehow, they're all fumbling on how to vendor lock their customers, and its not necessarily clear they're going to be able to. I expect some big falls from 10 figure businesses in the next year or two as they realize this is impossible. They've built an industry on the backs of gambling addicts and dopamine feins (I'm generalizing but this is a thing with LLM users (just read vibe coders posts on twitter, they're slot machine users). Ask sports betting operators from back in 2019-2022 how it worked out for them when they tried to give out 1-2k a year to attract new customers, and then realized their customers will switch platforms in an instant they see a new shiny offer. Look up the Fanduel Founders "exit" for an insight into this. They have to eventually stop catering to the slot machine users, which are generally paying for these hugely lossy flat rate subscriptions, and somehow get them used to a different type of payment model, or cater strictly to enterprise... Which also aren't going to tolerate paying 20k a month in tokens per developer, is my guess.... Lots of delicate pricing problems to figure out for all these companies.
- nake89 8mo ago
  That's crazy. I'm already barely willing to pay $10/month on Github Copilot. A product I love. Best value for money. If they pump it up to $200 (or to $20). I'll simply use crappier local model. It won't be as good. But I already own my gaming PC that can run local models, and electricity is cheap.
  - chasd00 8mo ago
    > I'll simply use crappier local model. It won't be as good. But I already own my gaming PC that can run local models, this is UNIX and Linux all over again lol. It's pretty amazing and nostalgic.
- stavros 8mo ago
  Calling LLM users "slot machine users" makes no sense and tells me that you just have an axe to grind.
  - askl 8mo ago
    True, they should be called "slop machine users" instead.
  - dakolli 8mo ago
    Found the guy who's chasing the llm output dragon. Get your fix bud. The addictive gaming/gambling mechanics built into llm interfaces has been extensively written on, and its very visible to anyone with an eye for these things.

zdragnar 8mo ago

Even if it more expensive, people will prefer subscription pricing over pay per use. When you ask it to do something and it goes off the rails, the payment plans have wildly different effects: Subscription- oh well, let's try again with a different prompt Pay per use- I just wasted money, this product sucks Even if it is less common than not, it has an outsized impact on how people feel using it.

msh 8mo ago
And it also caps your maximum expenses. A subscription user don’t have to worry something goes wrong and end up with a huge bill.
- gbear605 8mo ago
  At least theoretically, the bill would work on a “wallet” system, where you fill up your account with $X every month, and then you’re charged per use. That keeps there from being a huge bill, worst case you’re just on hold until the next fill up.

dakolli 8mo ago

I'm not going to say what platform but it's an agentic coding tool, I know for a fact the platform loses in the mid $200.00s on a $20.00 plan. 10:1 loss leader for customer acquisition is crazy, and they'll have to make that up in the future somehow, they're all fumbling on how to vendor lock their customers, and its not necessarily clear they're going to be able to. I expect some big falls from 10 figure businesses in the next year or two as they realize this is impossible. They've built an industry on the backs of gambling addicts and dopamine feins (I'm generalizing but this is a thing with LLM users (just read vibe coders posts on twitter, they're slot machine users). Ask sports betting operators from back in 2019-2022 how it worked out for them when they tried to give out 1-2k a year to attract new customers, and then realized their customers will switch platforms in an instant they see a new shiny offer. Look up the Fanduel Founders "exit" for an insight into this. They have to eventually stop catering to the slot machine users, which are generally paying for these hugely lossy flat rate subscriptions, and somehow get them used to a different type of payment model, or cater strictly to enterprise... Which also aren't going to tolerate paying 20k a month in tokens per developer, is my guess.... Lots of delicate pricing problems to figure out for all these companies.

nake89 8mo ago
That's crazy. I'm already barely willing to pay $10/month on Github Copilot. A product I love. Best value for money. If they pump it up to $200 (or to $20). I'll simply use crappier local model. It won't be as good. But I already own my gaming PC that can run local models, and electricity is cheap.
- chasd00 8mo ago
  > I'll simply use crappier local model. It won't be as good. But I already own my gaming PC that can run local models, this is UNIX and Linux all over again lol. It's pretty amazing and nostalgic.
stavros 8mo ago
Calling LLM users "slot machine users" makes no sense and tells me that you just have an axe to grind.
- askl 8mo ago
  True, they should be called "slop machine users" instead.
- dakolli 8mo ago
  Found the guy who's chasing the llm output dragon. Get your fix bud. The addictive gaming/gambling mechanics built into llm interfaces has been extensively written on, and its very visible to anyone with an eye for these things.