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I'm not sure what you're pushing back against here. I spent $200. If I had been paying API pricing it would have been $2,180.16. The article is about how enter

by simonw 5mo ago

I'm not sure what you're pushing back against here. I spent $200. If I had been paying API pricing it would have been $2,180.16. The article is about how enterprise customers get charged API pricing, which means if I had been employed by one of those companies I would have cost them $2,180.16. What am I missing?

OrangeDelonge 5mo ago
Large enterprises make deals and won’t be paying 2,180.16$ either. Just like with AWS
- waisbrot 5mo ago
  And "large" just means that AWS will assign an account manager to talk with you. I was at a start-up who spent $300k/year on AWS and that was enough to get special attention and discounts. Enterprise pricing is confusing.
- simonw 5mo ago
  That doesn't seem to be the case. From what I've seen enterprise deals get API pricing now. Have you seen evidence that's not true?
  - themgt 5mo ago
    I do know of moderate-size companies deploying OSS LLMs on their own GPU clusters, for ownership/security/maybe cost reasons. I'm somewhat surprised F500 companies are apparently just handing over all their data to the model providers. Could be fantastic for small shops while it lasts. The big guys have to pay 10x for precious tokens.
    - no-name-here 5mo ago
      I guess F500 companies’ AI contracts include data protections.
  - roomey 5mo ago
    Hi Simon, nice article. The parent there may be making the same assumption I am, that large enterprise _never_ pays sticker price. Also, to just color in the picture here, as I haven't seen it mentioned elsewhere, there is a very large Saas company at the moment who has given everyone unlimited tokens on Claude. And they have a dashboard showing who spends the most. So the "budget" went from about USD500 per per person (split between Claude and cursor) in Jan to... Well a soft limit of USD100k... Per month... Per person. People can still see the top line sticker price on their spend, but honestly I can't believe that the Saas is paying that full price when the invoice comes in. That said, there are some finance reports which are probably dropping soon where we will find out!
    - simonw 5mo ago
      > The parent there may be making the same assumption I am, that large enterprise _never_ pays sticker price. I shared that assumption until yesterday, when I found out that it wasn't holding for LLM pricing from OpenAI and Anthropic. That's what inspired me to write this piece. I think those token leaderboards are an obviously terrible idea and will go extinct very quickly now that people are paying attention to costs.
      - mvanbaak 5mo ago
        large enterprises dont pay openai or anthropic, they get this thing called copilot and get a nice price there. At least on this side of the pond (eu)
      - wongarsu 5mo ago
        But the feature list at https://claude.com/pricing#team-&-enterprise https://claude.com/pricing#team-&-enterprise literally lists "tiered incentives on committed spend" and "non-standard terms" as perks of the sales-assisted Enterprise plan. Maybe "non-standard terms" could mean "we dance for you if you pay", but what would "tiered incentives on committed spend" mean besides "we can negotiate on price if you bring the volume"
      - asib 5mo ago
        > > The parent there may be making the same assumption I am, that large enterprise _never_ pays sticker price. > I shared that assumption until yesterday, when I found out that it wasn't holding for LLM pricing from OpenAI and Anthropic. This reads like GP saying "enterprise never pays sticker price" and you responding "I thought so too until I saw the sticker price". Is there some info you have that you can't/didn't share? Your article doesn't offer anything beyond the above.
  - asfkasdfasdadf 5mo ago
    [dead]
- apsurd 5mo ago
  The point is that those a real prices real people are paying for real API usage. it's not made up. your point is large players won't pay those prices at massive volume. ok
- Anon1096 5mo ago
  Claude is so in demand at the moment that there aren't really volume discounts. Anthropic sets the terms and you either accept them or get lost they have that much of a lead (mindshare/desirability wise).
- yokoprime 5mo ago
  They pay sticker price. There may be exceptions for very very large companies like Amazon or Microsoft which have their own deals where they rent out compute in return for usage.
altruios 5mo ago
> If I had been paying API pricing it would have been $2,180.16 The point being made above is that API pricing is calculated... somehow... seemingly arbitrarily. Possibly untethered to the infrastructure costs entirely: which would be the basis of any 'value', however that holds the labor theory of value, which isn't accurate either. So how do you accurately price these tokens at all (other than through price-discovery: which is slow, messy and fuzzy)?
- NitpickLawyer 5mo ago
  > So how do you accurately price these tokens at all Like anything else in the economy: at the point where enough customers can pay you, and not enough will go to the cheaper competition.
  - altruios 5mo ago
    > at the point where enough customers can pay you > (other than through price-discovery: which is slow, messy and fuzzy) I notice a distinct lack of reading or comprehension (from everyone around me now, not just this comment) which worries me. I worry if LLM's are to blame. No one reads anymore...
    - no-name-here 5mo ago
      I imagine a number of Hacker News members might be devs that haven't dealt with terms like “price discovery” before, so we should all try to show grace.
      - altruios 5mo ago
        My apologies. I was taught that term in 7th grade econ. I assumed it was common vernacular.
        no-name-here 5mo ago
        Even among college graduates, only 17% could correctly answer a basic econ question (pre-AI) [1]. I looked up one ~1,000 page econ textbook, and it does not seem to mention price "discovery", or at least the only uses of the word "discovery" were about things like a scientific/oil discovery [2]. "Even high-achieving students demonstrate relatively lower understanding of economics compared with other subjects." [1] [1] https://www.carolinajournal.com/opinion/why-americans-flunk-economics-and-why-it-matters/ https://www.carolinajournal.com/opinion/why-americans-flunk-... [2] https://assets.openstax.org/oscms-prodcms/media/documents/principles-economics-3e_-_WEB.pdf https://assets.openstax.org/oscms-prodcms/media/documents/pr...
pembrook 5mo ago
API pricing drops DRAMATICALLY in enterprise agreements. As with pretty much anything priced on volume/usage. Enterprise deals are negotiated ad-hoc, the listed pricing is simply a jumping off point for the final negotiated discount. If you’re going to give 20,000 employees Claude code you are not going to be spending $1B per year on Anthropic tokens as if you gave everyone an individual API key. Just as Anthropic isn’t paying AWS SES $10,000,000 to send 1 email update to their massive user base when the next Claude version drops.
- simonw 5mo ago
  > API pricing drops DRAMATICALLY in enterprise agreements Do you have any numbers or reports to back that up?
- taude 5mo ago
  This isn't true at the moment, though. So far there hasn't been the negotiating power. What happens is you end up capping usage for employees at a fixed amount. I think eventually, prices will come down and there will be discounts, but for enterprise accounts at least of our size (<5000), we're paying almost 100% retail, which kind of sucks, because it's expensive, and pretty easy to burn $50 to $100+ in a day, if you're not careful. In fact we got pushed off the former plan to the token-utility one at the last contract negotiation. Going to be interesting to determing the metrics we give to engineers for determining whether the spend on this is worth it. Measuring PRs, lines of code committed, commits fully generated by agentic workflows, etc.....
- lrae 5mo ago
  > Just as Anthropic isn’t paying AWS SES $10,000,000 to send 1 email update How much do you think emails cost? That number is just so far off? But besides that, running SES is also quite a bit cheaper than SOTA ai models with high demand (and comparatively) no competition. And quite a bit more pressure to make money (soon).
  - tomjakubowski 5mo ago
    I think it was a figurative example. For what it's worth, $10,000,000 buys you 100 billion (1e11) outbound emails on SES at the sticker price ($0.10/1000 emails). One source puts the number of emails sent worldwide in 2024 at 132 trillion (1.32e14). https://aws.amazon.com/ses/pricing/ https://aws.amazon.com/ses/pricing/ https://www.statista.com/statistics/456500/daily-number-of-e-mails-worldwide/ https://www.statista.com/statistics/456500/daily-number-of-e...
eqvinox 5mo ago
Just because API pricing would've been $2180.16 doesn't mean that's the value of those tokens. For starters, you personally probably wouldn't have paid that. But also, sales price isn't value. This is like saying, oh, I saw this bar of gold somewhere for $10000 but got it here for $1000! So I got $10000 worth of gold for $1000! - no, the value of that gold is determined by its weight, which wasn't even mentioned. We have no market convergence on tokens yet (and it'll differ between LLMs), so it's impossible to say what value you got for your $200.
- remus 5mo ago
  > Just because API pricing would've been $2180.16 doesn't mean that's the value of those tokens. You seem to be suggesting the price of tokens is entirely disconnected to the cost of providing the service? I don't see much basis for that assumption.
- aspenmartin 5mo ago
  He's saying he's getting a great deal...a token from Opus on Claude code is the same as a token from Opus on the API. I remain as confused as Simon. He's not talking about "here's the ROI I got from my $100 subscription" it's "here's how much I saved from getting the monthly subscription instead of sending things through an API".
  - mjr00 5mo ago
    Right, the confusion is that the quote-unquote "subsidized" monthly pricing is often used by Anthropic/OpenAI skeptics as proof that inference is unprofitable, i.e. the API would have cost $2000 but you only paid $200 for a subscription, therefore OpenAI is selling dollars for 95 cents and the house of cards is about to collapse. As the GP says, this is faulty logic because we don't know what the actual cost of a token is; OpenAI might only pay $1 in inference costs, in which case they're merely "incredibly profitable" making $199 off you instead of "ludicrously profitable" making $1999 off you had you used the API. But to your point, re-reading the article, this is not what Simon is saying at all; he's just pointing out that he got to use ~$2000 "worth" of tokens on his $200 plan. Which makes total sense! Subscriptions are sticky, that's why the entire software industry moved towards subscription models (as much as we hate it); the person paying $200/month is more likely to stick around than the person who paid $2000 using the API.
xnorswap 5mo ago
Have you or I misunderstood the "teams" plan? edit: I missed the "enterprise" feature matrix with the usual audit/compliance stuff to force the biggest enterprise customers onto enterprise plans. Otherwise the "teams" plan is much better value for any business. orig-continued: https://claude.com/pricing/team https://claude.com/pricing/team Teams premium is "Everything in standard, plus more usage*" And from my experience, it's a very generous usage, I've only hit the limits once or twice, and both times required multi-boxing agents. I could single-window agentic development all day on opus-4.7 auto-mode without hitting limits. If you're a business using claude, then that seems like the right plan, the enteprise/API plan seems more suited to where your product is built on top of the agent themselves, so seats/limits aren't really meaningful?
- nr378 5mo ago
  Claude Teams and Claude Enterprise are 2 distinct plans. Simon is right that Enterprise seats have no included usage (and so all usage is charged at API billing rates), whereas Teams seats do.
rtgfhyuj 5mo ago
[dead]
recursive 5mo ago
I'm willing to charge you $100k for those same tokens. Does that mean you'll be saving $99k? It sounds an awful lot like the mark-up to mark-down scheme where the price stays the same.
prepend 5mo ago
Lets say McDonalds charges $2000 for a BigMac. If they offer a deal and sell it to you for $200, did you save $1800? Maybe if you spend $2000 on a BigMac. But it’s unlikely you would buy such a burger. What is a hamburger worth? Don’t look to McDonalds to set the value.

by simonw 5mo ago

OrangeDelonge 5mo ago

Large enterprises make deals and won’t be paying 2,180.16$ either. Just like with AWS

waisbrot 5mo ago
And "large" just means that AWS will assign an account manager to talk with you. I was at a start-up who spent $300k/year on AWS and that was enough to get special attention and discounts. Enterprise pricing is confusing.
simonw 5mo ago
That doesn't seem to be the case. From what I've seen enterprise deals get API pricing now. Have you seen evidence that's not true?
- themgt 5mo ago
  I do know of moderate-size companies deploying OSS LLMs on their own GPU clusters, for ownership/security/maybe cost reasons. I'm somewhat surprised F500 companies are apparently just handing over all their data to the model providers. Could be fantastic for small shops while it lasts. The big guys have to pay 10x for precious tokens.
  - no-name-here 5mo ago
    I guess F500 companies’ AI contracts include data protections.
- roomey 5mo ago
  Hi Simon, nice article. The parent there may be making the same assumption I am, that large enterprise _never_ pays sticker price. Also, to just color in the picture here, as I haven't seen it mentioned elsewhere, there is a very large Saas company at the moment who has given everyone unlimited tokens on Claude. And they have a dashboard showing who spends the most. So the "budget" went from about USD500 per per person (split between Claude and cursor) in Jan to... Well a soft limit of USD100k... Per month... Per person. People can still see the top line sticker price on their spend, but honestly I can't believe that the Saas is paying that full price when the invoice comes in. That said, there are some finance reports which are probably dropping soon where we will find out!
  - simonw 5mo ago
    > The parent there may be making the same assumption I am, that large enterprise _never_ pays sticker price. I shared that assumption until yesterday, when I found out that it wasn't holding for LLM pricing from OpenAI and Anthropic. That's what inspired me to write this piece. I think those token leaderboards are an obviously terrible idea and will go extinct very quickly now that people are paying attention to costs.
    - mvanbaak 5mo ago
      large enterprises dont pay openai or anthropic, they get this thing called copilot and get a nice price there. At least on this side of the pond (eu)
    - wongarsu 5mo ago
      But the feature list at https://claude.com/pricing#team-&-enterprise https://claude.com/pricing#team-&-enterprise literally lists "tiered incentives on committed spend" and "non-standard terms" as perks of the sales-assisted Enterprise plan. Maybe "non-standard terms" could mean "we dance for you if you pay", but what would "tiered incentives on committed spend" mean besides "we can negotiate on price if you bring the volume"
    - asib 5mo ago
      > > The parent there may be making the same assumption I am, that large enterprise _never_ pays sticker price. > I shared that assumption until yesterday, when I found out that it wasn't holding for LLM pricing from OpenAI and Anthropic. This reads like GP saying "enterprise never pays sticker price" and you responding "I thought so too until I saw the sticker price". Is there some info you have that you can't/didn't share? Your article doesn't offer anything beyond the above.
- asfkasdfasdadf 5mo ago
  [dead]
apsurd 5mo ago
The point is that those a real prices real people are paying for real API usage. it's not made up. your point is large players won't pay those prices at massive volume. ok
Anon1096 5mo ago
Claude is so in demand at the moment that there aren't really volume discounts. Anthropic sets the terms and you either accept them or get lost they have that much of a lead (mindshare/desirability wise).
yokoprime 5mo ago
They pay sticker price. There may be exceptions for very very large companies like Amazon or Microsoft which have their own deals where they rent out compute in return for usage.

altruios 5mo ago

> If I had been paying API pricing it would have been $2,180.16 The point being made above is that API pricing is calculated... somehow... seemingly arbitrarily. Possibly untethered to the infrastructure costs entirely: which would be the basis of any 'value', however that holds the labor theory of value, which isn't accurate either. So how do you accurately price these tokens at all (other than through price-discovery: which is slow, messy and fuzzy)?

NitpickLawyer 5mo ago
> So how do you accurately price these tokens at all Like anything else in the economy: at the point where enough customers can pay you, and not enough will go to the cheaper competition.
- altruios 5mo ago
  > at the point where enough customers can pay you > (other than through price-discovery: which is slow, messy and fuzzy) I notice a distinct lack of reading or comprehension (from everyone around me now, not just this comment) which worries me. I worry if LLM's are to blame. No one reads anymore...
  - no-name-here 5mo ago
    I imagine a number of Hacker News members might be devs that haven't dealt with terms like “price discovery” before, so we should all try to show grace.
    - altruios 5mo ago
      My apologies. I was taught that term in 7th grade econ. I assumed it was common vernacular.
      - no-name-here 5mo ago
        Even among college graduates, only 17% could correctly answer a basic econ question (pre-AI) [1]. I looked up one ~1,000 page econ textbook, and it does not seem to mention price "discovery", or at least the only uses of the word "discovery" were about things like a scientific/oil discovery [2]. "Even high-achieving students demonstrate relatively lower understanding of economics compared with other subjects." [1] [1] https://www.carolinajournal.com/opinion/why-americans-flunk-economics-and-why-it-matters/ https://www.carolinajournal.com/opinion/why-americans-flunk-... [2] https://assets.openstax.org/oscms-prodcms/media/documents/principles-economics-3e_-_WEB.pdf https://assets.openstax.org/oscms-prodcms/media/documents/pr...

pembrook 5mo ago

API pricing drops DRAMATICALLY in enterprise agreements. As with pretty much anything priced on volume/usage. Enterprise deals are negotiated ad-hoc, the listed pricing is simply a jumping off point for the final negotiated discount. If you’re going to give 20,000 employees Claude code you are not going to be spending $1B per year on Anthropic tokens as if you gave everyone an individual API key. Just as Anthropic isn’t paying AWS SES $10,000,000 to send 1 email update to their massive user base when the next Claude version drops.

simonw 5mo ago
> API pricing drops DRAMATICALLY in enterprise agreements Do you have any numbers or reports to back that up?
taude 5mo ago
This isn't true at the moment, though. So far there hasn't been the negotiating power. What happens is you end up capping usage for employees at a fixed amount. I think eventually, prices will come down and there will be discounts, but for enterprise accounts at least of our size (<5000), we're paying almost 100% retail, which kind of sucks, because it's expensive, and pretty easy to burn $50 to $100+ in a day, if you're not careful. In fact we got pushed off the former plan to the token-utility one at the last contract negotiation. Going to be interesting to determing the metrics we give to engineers for determining whether the spend on this is worth it. Measuring PRs, lines of code committed, commits fully generated by agentic workflows, etc.....
lrae 5mo ago
> Just as Anthropic isn’t paying AWS SES $10,000,000 to send 1 email update How much do you think emails cost? That number is just so far off? But besides that, running SES is also quite a bit cheaper than SOTA ai models with high demand (and comparatively) no competition. And quite a bit more pressure to make money (soon).
- tomjakubowski 5mo ago
  I think it was a figurative example. For what it's worth, $10,000,000 buys you 100 billion (1e11) outbound emails on SES at the sticker price ($0.10/1000 emails). One source puts the number of emails sent worldwide in 2024 at 132 trillion (1.32e14). https://aws.amazon.com/ses/pricing/ https://aws.amazon.com/ses/pricing/ https://www.statista.com/statistics/456500/daily-number-of-e-mails-worldwide/ https://www.statista.com/statistics/456500/daily-number-of-e...

eqvinox 5mo ago

Just because API pricing would've been $2180.16 doesn't mean that's the value of those tokens. For starters, you personally probably wouldn't have paid that. But also, sales price isn't value. This is like saying, oh, I saw this bar of gold somewhere for $10000 but got it here for $1000! So I got $10000 worth of gold for $1000! - no, the value of that gold is determined by its weight, which wasn't even mentioned. We have no market convergence on tokens yet (and it'll differ between LLMs), so it's impossible to say what value you got for your $200.

remus 5mo ago
> Just because API pricing would've been $2180.16 doesn't mean that's the value of those tokens. You seem to be suggesting the price of tokens is entirely disconnected to the cost of providing the service? I don't see much basis for that assumption.
aspenmartin 5mo ago
He's saying he's getting a great deal...a token from Opus on Claude code is the same as a token from Opus on the API. I remain as confused as Simon. He's not talking about "here's the ROI I got from my $100 subscription" it's "here's how much I saved from getting the monthly subscription instead of sending things through an API".
- mjr00 5mo ago
  Right, the confusion is that the quote-unquote "subsidized" monthly pricing is often used by Anthropic/OpenAI skeptics as proof that inference is unprofitable, i.e. the API would have cost $2000 but you only paid $200 for a subscription, therefore OpenAI is selling dollars for 95 cents and the house of cards is about to collapse. As the GP says, this is faulty logic because we don't know what the actual cost of a token is; OpenAI might only pay $1 in inference costs, in which case they're merely "incredibly profitable" making $199 off you instead of "ludicrously profitable" making $1999 off you had you used the API. But to your point, re-reading the article, this is not what Simon is saying at all; he's just pointing out that he got to use ~$2000 "worth" of tokens on his $200 plan. Which makes total sense! Subscriptions are sticky, that's why the entire software industry moved towards subscription models (as much as we hate it); the person paying $200/month is more likely to stick around than the person who paid $2000 using the API.

xnorswap 5mo ago

Have you or I misunderstood the "teams" plan? edit: I missed the "enterprise" feature matrix with the usual audit/compliance stuff to force the biggest enterprise customers onto enterprise plans. Otherwise the "teams" plan is much better value for any business. orig-continued: https://claude.com/pricing/team https://claude.com/pricing/team Teams premium is "Everything in standard, plus more usage*" And from my experience, it's a very generous usage, I've only hit the limits once or twice, and both times required multi-boxing agents. I could single-window agentic development all day on opus-4.7 auto-mode without hitting limits. If you're a business using claude, then that seems like the right plan, the enteprise/API plan seems more suited to where your product is built on top of the agent themselves, so seats/limits aren't really meaningful?

nr378 5mo ago
Claude Teams and Claude Enterprise are 2 distinct plans. Simon is right that Enterprise seats have no included usage (and so all usage is charged at API billing rates), whereas Teams seats do.

rtgfhyuj 5mo ago

[dead]

recursive 5mo ago

I'm willing to charge you $100k for those same tokens. Does that mean you'll be saving $99k? It sounds an awful lot like the mark-up to mark-down scheme where the price stays the same.

prepend 5mo ago

Lets say McDonalds charges $2000 for a BigMac. If they offer a deal and sell it to you for $200, did you save $1800? Maybe if you spend $2000 on a BigMac. But it’s unlikely you would buy such a burger. What is a hamburger worth? Don’t look to McDonalds to set the value.