they’ve both cut api costs drastically and reduced what the 200 plan got you since that article was slopped together, so not sure how accurate the data is anymore
also the margin percentage includes amortized training costs, which is a crazy thing to just multiply by a different usage value afterwards. the actual cost of one of these plans is far lower
they obviously are still losing money, but that article physically pains me
The article I posted explains why a previously floated estimate of €14,000 was a gross miscalculation and instead claims that the cost to open AI is closer to €4,000 (for a €200 account used to its full capacity).
14,000 is high for reasons in the article. 4,000 is high since it flows from the inappropriately applied 70% margin. the actual cost of one new person signing up for a 200 plan and using it to full capacity is much lower. the 70% margin is based on a fixed income of the company, a small operating cost per token, a large fixed cost to the company spread over every token generated, and the api price.
it’s a bit like saying I pay 100 for my car payment, 100 for gas, and drive 200 miles, every month. simple math, cost is 1 per mile (margin is this divided by sale price, then the article multiplies by sale price to cancel it out). if I start driving for a ride share company on top of my normal driving, is it correct to say (ignoring depreciation since none of openai’s assets depreciate based on use) that I only break even if they pay me ≥1 per mile?
spoiler
of course not, you already need the car, cost to you is .5. you only lose .5 per mile doing the thing you’re selling. the rest is operating costs that stay fixed.
it costs the same to have trained the model whether you use your 200 plan or not. we don’t have those numbers for openai. we can’t just multiply the operating costs that have been calculated based on the price and volume of a different product.
you need to account for the car price in profits somewhere, but it’s not increasing based on the usage
EVEN WORSE: that 70% margin is before compute. so it is absolutely meaningless even without trying to convert it back to cost of goods. once you try and convert it back it represents everything but the part that scales with usage lmao. absolute clown article. their citations are just links to home pages of random news sites.
they’ve both cut api costs drastically and reduced what the 200 plan got you since that article was slopped together, so not sure how accurate the data is anymore
also the margin percentage includes amortized training costs, which is a crazy thing to just multiply by a different usage value afterwards. the actual cost of one of these plans is far lower
they obviously are still losing money, but that article physically pains me
The article I posted explains why a previously floated estimate of €14,000 was a gross miscalculation and instead claims that the cost to open AI is closer to €4,000 (for a €200 account used to its full capacity).
Which figure(s) are you disagreeing with?
14,000 is high for reasons in the article. 4,000 is high since it flows from the inappropriately applied 70% margin. the actual cost of one new person signing up for a 200 plan and using it to full capacity is much lower. the 70% margin is based on a fixed income of the company, a small operating cost per token, a large fixed cost to the company spread over every token generated, and the api price.
it’s a bit like saying I pay 100 for my car payment, 100 for gas, and drive 200 miles, every month. simple math, cost is 1 per mile (margin is this divided by sale price, then the article multiplies by sale price to cancel it out). if I start driving for a ride share company on top of my normal driving, is it correct to say (ignoring depreciation since none of openai’s assets depreciate based on use) that I only break even if they pay me ≥1 per mile?
spoiler
of course not, you already need the car, cost to you is .5. you only lose .5 per mile doing the thing you’re selling. the rest is operating costs that stay fixed.
it costs the same to have trained the model whether you use your 200 plan or not. we don’t have those numbers for openai. we can’t just multiply the operating costs that have been calculated based on the price and volume of a different product.
you need to account for the car price in profits somewhere, but it’s not increasing based on the usage
EVEN WORSE: that 70% margin is before compute. so it is absolutely meaningless even without trying to convert it back to cost of goods. once you try and convert it back it represents everything but the part that scales with usage lmao. absolute clown article. their citations are just links to home pages of random news sites.
I think I understand now. Good points, thanks for taking the effort to elaborate.