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There is a narrative that subscriptions are subsidized. Perhaps we should consider that API users are being price gouged?
by cactusplant7374 2mo ago
There is a narrative that subscriptions are subsidized. Perhaps we should consider that API users are being price gouged?
- arjie 2mo agoInference is profitable. Even open models can be profitable. Obviously your cost of capital is the thing that influences that the most.
- dgellow 2mo agoDo we know this as a fact? Do we have proofs it is profitable? I haven’t seen any evidence so far, it’s mostly something repeated and accepted as fact
- Arnt 2mo agoAren't there providers who will run open models for you? If those are profitable, or haven't taken large investments, then it's reasonable to assume that the same thing is profitable for other providers.
- WithinReason 2mo agoOpenRouter exists
- kingkongjaffa 2mo agoNo way of knowing, this report is about revenue not profit.
- eddq 2mo agoWe already know they are not profitable in the truest sense w.r.t valuation. FCFF = EBIT(1-t) - Reinvestment. This is how the operating assets are valued via intrinsic valuation. Could they generate immense earnings and cash flows net of reinvestment? Sure. DO I believe so? Nope. They've got way too out infront ahead of their skies about where this technology belongs and operates best.
- esafak 2mo agoThere is so much competition gouging is impossible. If somebody is willing to pay Anthropic's high prices let them. I don't.
- eddq 2mo agoAnd its only transitory. Both OAI and Anthropic tried to time their pricing to look good heading into an IPO window. They got screwed as China has kept up. Wonder how they're gonna overcome this problem - protectionism? Maybe.
- cactusplant7374 2mo agoMost developers would rather use Claude or Codex than mess around with anything else. Codex has 15+ million users.
- dgellow 2mo agoBut the 15 millions includes free users and companies purchasing seats in bulk, no? Very impressive growth for sure (they doubled in around a month?), but we don’t know the ratio of paying seats
- nozzlegear 2mo ago> Most developers would rather use Claude or Codex than mess around with anything else. You're projecting your preference for these products onto a hugely fragmented group of people.
- cactusplant7374 2mo agoIt cannot be denied that local LLM people are very proud. But how many of them are there really?
- brookst 2mo agoOr maybe everyone’s paying proportionately to value received?
- Arnt 2mo agoThere is such a narrative. Many people have reported that their use would be drastically more expensive with the API. None have (afaict) reported how much the average subscription is used.