This price is high even because of the current shortage of inference cards available to DeepSeek; they claimed in their press release that once the Ascend 950 computing cards are launched in the second half of the year, the price of the Pro version will drop significantly

API prices may be profitable. Subscriptions may still be subsidized for power users. Free tiers almost certainly are. And frontier labs may be subsidizing overall business growth, training, product features, and peak capacity, even if a normal metered API call is profitable on marginal inference.

They are profitable to opex costs, but not capex costs with the current depreciation schedules, though those are now edging higher than expected.

Prices are not just hard cost of inference. Training costs are not equal. Chinese labs have cheaper access to large data centers. I also suspect they operate far more efficiently than orgs like openAI.

They got loans to buy inference hardware on the promise of potential AGI, or at least something approaching ASI, all leading to stupid amounts of profit for those investors.

We therefore cannot just look at inference costs directly, training is part of the pitch. Without the promises of continuous improvement and chasing the elusive AGI, money for investments for inference evaporates.

I was thinking the same. How can it be than other providers can offer third-party open source models with roughly the similar quality like this, Kimi K2.6 or GLM 5.1 for 10 times less the price? How can it be that GPT 5.5 is suddenly twice the price as GPT 5.4 while being faster? I don't believe that it's a bigger, more expensive model to run, it's just they're starting to raise up the prices because they can and their product is good (which is honest as long as they're transparent with it). Honestly the movement about subscription costing the company 20 times more than we're paying is just a PR movement to justify the price hike.

My thoughts exactly. I also believe that subscription services are profitable, and the talk about subsidies is just a way to extract higher profit margins from the API prices businesses pay.

I haven't seen anyone claiming that API prices are subsidized.

At some point (from the very beginning till ~2025Q4) Claude Code's usage limit was so generous that you can get roughly $10~20 (API-price-equivalent) worth of usage out of a $20/mo Pro plan each day (2 * 5h window) - and for good reason, because LLM agentic coding is extremely token-heavy, people simply wouldn't return to Claude Code for the second time if provided usage wasn't generous or every prompt costs you $1. And then Codex started trying to poach Claude Code users by offering even greater limits and constantly resetting everyone's limit in recent months. The API price would have to be 30x operating cost to make this not a subsidy. That would be an extraordinary claim.

And they actually say the prices will be "significantly" lower in second semester when Huawei 650 chips comes in.

Insert always has been meme.

But seriously, it just stems from the fact some people want AI to go away. If you set your conclusion first, you can very easily derive any premise. AI must go away -> AI must be a bad business -> AI must be losing money.

They’ve also announced Pro price will further drop 2H26 once they have more HUAWEI chips.

Point taken but there isnt any western providers there yet. Power is cheaper in china.

It's because investors in OpenAI/Anthropic want to get their money back in 10 months, not in 10 years.

I mean, not one "bleeding edge" lab has stated they are profitable. They don't publish financials aside from revenue. And in Anthropic's case, they fuck with pricing every week. Clearly something is wrong here.

It's the decades of performance doesn't matter SV/web culture. I'd be surprised if over 1% of OpenAI/Anthropic staff know how any non-toy computer system works.

> I’d like somebody to explain to me how the endless comments of "bleeding edge labs are subsidizing the inference at an insane rate" make sense in light of a humongous model like v4 pro being $4 per 1M. I’d bet even the subscriptions are profitable, much less the API prices.

One answer - Chinese Communist Party. They are being subsidized by the state.