I've been read reports which suggesting that the major AI model companies aren't particularly profitable. The ones actually making money are those selling servers and providing power infrastructure. The bulk of these companies' revenue flows straight to those costs, leaving slim profit margins. That's to say nothing of services like Claude and ChatGPT with their subscription tiers — unless, of course, they happen to land a customer who pays $200 a month and barely touches the product.
Does this mean Claude Code $200 plan is really costing them more to run it especially for power users or they are just ripping off people with API usage? If they are just subsidizing for the $200 plan, is it just a land grab for now? and then raise prices later?
Clearly land grab, they reported billions of losses every quater. To be break even it needs to cost about 1000$ month, but then they would lose at lot of customers. Problem is they have no moat and will just burn billions of VC money to lose customers later.
If I don't need something powerful like GPT 5.5 or Claude, I could just use Deepseek, Qwen or the cheaper chinese models. I think everyone is getting smart about routing their workload to models that are cheap but good enough to fulfill the request/task and then reserving the pricier like Claude for tasks needing higher intelligence.
Yup, I have been testing Qwen and Kimi lately. Seeing comparable accuracy of Qwen-Instruct (not thinking) to closed source models. Here's a blog we published on that <a href="https://www.coralbricks.ai/blog/alphacumen-finance-benchmarks" rel="nofollow">https://www.coralbricks.ai/blog/alphacumen-finance-benchmark...</a>
A lot of my queries are summarize/explain/fact check, and these are covered 100% on my CPU locally [0], reducing frontier model reliance<p>[0] <a href="https://news.ycombinator.com/item?id=48301003">https://news.ycombinator.com/item?id=48301003</a>
Interesting analysis that most token cost is due to re-reading the same context.
You mean if I use 2x $200 Max fully every week, I actually consume ~$5000 worth of API usage ?? Wow!!!
My guess is you can push to $5k/month token usage with just a single Max subscription.<p>During my 30 days analysis window, I consumed $3371 of token and didn't hit rate limits even once.<p>I plan to keep pushing my token usage higher until I hit rate limits at least 5-10 times in a month.
I hit rate-limit every other day... 5 hour... Week... I consume my 20x weekly in 3 days! So having 2x 20x!<p>If I could harness $10000 worth of API usage... this is the best time, no idea how long we will get this subsidy! I wont pay $10000 out of my pockets to do the same work!
It's hard for me to figure out what to use all those tokens for
A 17x subsidy is crazy. It really highlights the hidden cost of context window re-evaluation in agent loops.
Subsidy? Sound more like raw API is just expensive.
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