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The opportunity cost isn't selling subscriptions, the cost is the gap between what they could sell the GPU time for via their API vs what they're selling it for
by mike_hearn 8mo ago
The opportunity cost isn't selling subscriptions, the cost is the gap between what they could sell the GPU time for via their API vs what they're selling it for in a flat rate subscription. If you assume API demand is unlimited and GPU supply is fixed, then the opportunity cost is the 'real' loss of revenue that comes from redirecting supply away from customers willing to pay more to customers willing to pay less.
- d1sxeyes 8mo ago> If you assume API demand is unlimited Doing a lot of heavy lifting here. Not everyone on a subscription plan would convert to a 200USD/mo API consumer.
- mike_hearn 8mo agoNo but demand comes from a lot of sources beyond vibe coders.
- d1sxeyes 8mo agoTrue, but you need to run the optimisation function to calculate at what X does the increased revenue at lower margin from Pro Max subscribers outweigh the reduced revenue at higher margin for API consumers, and adjust your pricing to approach X. I'm sure that Anthropic have some very smart folks on that right now.