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Generally speaking, B2B prices are rarely supply-and-demand priced in the usual sense. YC has advised startups in the past that it's easier to sell a single $1

Generally speaking, B2B prices are rarely supply-and-demand priced in the usual sense. YC has advised startups in the past that it's easier to sell a single $100k customer than 100 $1k customers. It would also be relatively surprising to learn that i.e. the Chinese providers are OOMs better at inference than OAI/Anthropic (like their prices would imply if they were in a perfectly competitive market).

bonoboTP 2mo ago
Chinese prices aren't really OOM cheaper. Deepseek recently did a big price hike too.
- drawnwren 2mo ago
  Fair, I hadn't looked recently. It looks like currently kimi is either 1/2 or 1/4 Ant pricing depending on whether you think Opus 5 is usable or not. (Deepseek is still an OOM though)
- ronsor 2mo ago
  The one thing I trust is that Chinese prices aren't overinflated. They're almost certainly closer to the actual cost of inference + training amortization than what Western labs are offering. DeepSeek's price hike is mostly driven by increased demand, for example. It's not about losses so much as they don't have enough infrastructure and need to reduce demand somehow.
  - bonoboTP 2mo ago
    Why do you have this trust? Are they not profit oriented? Or you suspect that Xi's policy push is to undercut American AI?
    - pyvpx 2mo ago
      Are you familiar with Chinas version of capitalism? It is markedly different than “the” western model
      - Filligree 2mo ago
        I am not, but would be interested to hear. Any articles?
        al_hag 2mo ago
        "Overcapacity and low profitability" [1] is how I understand the difference, i.e. different competitive ecosystem from a different policy and intervention style. https://www.dbresearch.com/PROD/IE-PROD/PDFVIEWER.calias?pdfViewerPdfUrl=PROD0000000000603307&rwnode=REPORT https://www.dbresearch.com/PROD/IE-PROD/PDFVIEWER.calias?pdf...
        jimz 2mo ago
        There's no English-language article that can fully capture the system because it's a moving target to begin with, and anything official is vague on purpose (to be fair, much of the legislation in the US is too, except the Constitutional backstop and co-equal judiciary does not exist in China). The official messaging is always targeted and curated with a specific audience in mind and how much truth is contained within varies. The best way to describe it without turning it into an essay is that it's "aspirationally market-driven" system that is not defined by a fixed and consistent ideology but rather the constraints of the capacity of the administrative state to control the parts of the economy that is legible to the state. It's not a free market except for the black market, but the black market is frankly huge if nothing else to compensate for the state asserting not just a monopoly on the use of violence but also the monopolistic determinator of morality, which the people are less willing to buy into, but that disconnection itself creates an opportunity for arbitrage. That is the relationship dynamic that have retained some degree of stability, but everything else is effectively subject to change on a dime without notice. The party will never accept openly that it is capitalistic and in some sense that's not even a lie, but what the state is able to impose and what the people actually do are very different things. As the state excludes 99% of the population writ large from politics, full stop (you are either born into it, or you're not eligible to participate, with some narrow exceptions that occasionally pop up), there's not much of a ground-level appetite for dogma and doctrines. Instead you end up with a pragmatic, descriptive market that exists differently within and without, and just like the socialism label being basically symbolic, same goes for capitalism. People have been talking about late capitalism in the west for a century. The Chinese state would argue that we cannot be in late capitalism because we're actually in the first stage of socialism, and the people would wonder how we got to late capitalism when they never got to experience early or middle capitalism. But really the only thing we know that definitively does not work is implenting Marxism and Marxism-Leninism and Maoism and its offshoots as doctrine. Whether that means that the default is a prescriptive version of capitalism is, well, open to debate, and probably too simplistic.
  - LoganDark 2mo ago
    I don't think DeepSeek's price increase has to do with increased demand, but rather increased investment. I think they increased their capacity and want to make the money back.
smivan 2mo ago
My pet theory is that the PRC is heavily subsidizing the hosted inferencing costs in order to capture valuable training data, token usage patterns and the occasional leak of valuable data. Given their past history and current geopolitics, I'd be willing to bet this is more likely than not.

bonoboTP 2mo ago

Chinese prices aren't really OOM cheaper. Deepseek recently did a big price hike too.

drawnwren 2mo ago
Fair, I hadn't looked recently. It looks like currently kimi is either 1/2 or 1/4 Ant pricing depending on whether you think Opus 5 is usable or not. (Deepseek is still an OOM though)
ronsor 2mo ago
The one thing I trust is that Chinese prices aren't overinflated. They're almost certainly closer to the actual cost of inference + training amortization than what Western labs are offering. DeepSeek's price hike is mostly driven by increased demand, for example. It's not about losses so much as they don't have enough infrastructure and need to reduce demand somehow.
- bonoboTP 2mo ago
  Why do you have this trust? Are they not profit oriented? Or you suspect that Xi's policy push is to undercut American AI?
  - pyvpx 2mo ago
    Are you familiar with Chinas version of capitalism? It is markedly different than “the” western model
    - Filligree 2mo ago
      I am not, but would be interested to hear. Any articles?
      - al_hag 2mo ago
        "Overcapacity and low profitability" [1] is how I understand the difference, i.e. different competitive ecosystem from a different policy and intervention style. https://www.dbresearch.com/PROD/IE-PROD/PDFVIEWER.calias?pdfViewerPdfUrl=PROD0000000000603307&rwnode=REPORT https://www.dbresearch.com/PROD/IE-PROD/PDFVIEWER.calias?pdf...
      - jimz 2mo ago
        There's no English-language article that can fully capture the system because it's a moving target to begin with, and anything official is vague on purpose (to be fair, much of the legislation in the US is too, except the Constitutional backstop and co-equal judiciary does not exist in China). The official messaging is always targeted and curated with a specific audience in mind and how much truth is contained within varies. The best way to describe it without turning it into an essay is that it's "aspirationally market-driven" system that is not defined by a fixed and consistent ideology but rather the constraints of the capacity of the administrative state to control the parts of the economy that is legible to the state. It's not a free market except for the black market, but the black market is frankly huge if nothing else to compensate for the state asserting not just a monopoly on the use of violence but also the monopolistic determinator of morality, which the people are less willing to buy into, but that disconnection itself creates an opportunity for arbitrage. That is the relationship dynamic that have retained some degree of stability, but everything else is effectively subject to change on a dime without notice. The party will never accept openly that it is capitalistic and in some sense that's not even a lie, but what the state is able to impose and what the people actually do are very different things. As the state excludes 99% of the population writ large from politics, full stop (you are either born into it, or you're not eligible to participate, with some narrow exceptions that occasionally pop up), there's not much of a ground-level appetite for dogma and doctrines. Instead you end up with a pragmatic, descriptive market that exists differently within and without, and just like the socialism label being basically symbolic, same goes for capitalism. People have been talking about late capitalism in the west for a century. The Chinese state would argue that we cannot be in late capitalism because we're actually in the first stage of socialism, and the people would wonder how we got to late capitalism when they never got to experience early or middle capitalism. But really the only thing we know that definitively does not work is implenting Marxism and Marxism-Leninism and Maoism and its offshoots as doctrine. Whether that means that the default is a prescriptive version of capitalism is, well, open to debate, and probably too simplistic.
- LoganDark 2mo ago
  I don't think DeepSeek's price increase has to do with increased demand, but rather increased investment. I think they increased their capacity and want to make the money back.

smivan 2mo ago

My pet theory is that the PRC is heavily subsidizing the hosted inferencing costs in order to capture valuable training data, token usage patterns and the occasional leak of valuable data. Given their past history and current geopolitics, I'd be willing to bet this is more likely than not.