this post was submitted on 15 Aug 2025
405 points (95.1% liked)
Technology
74073 readers
2679 users here now
This is a most excellent place for technology news and articles.
Our Rules
- Follow the lemmy.world rules.
- Only tech related news or articles.
- Be excellent to each other!
- Mod approved content bots can post up to 10 articles per day.
- Threads asking for personal tech support may be deleted.
- Politics threads may be removed.
- No memes allowed as posts, OK to post as comments.
- Only approved bots from the list below, this includes using AI responses and summaries. To ask if your bot can be added please contact a mod.
- Check for duplicates before posting, duplicates may be removed
- Accounts 7 days and younger will have their posts automatically removed.
Approved Bots
founded 2 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
And perhaps even more importantly, the per-token cost of GPT-5's API is less than GPT-4's. That's why OpenAI was so eager to move everyone onto it, it means more profit for them.
I don’t believe api costs are tied all that closely to the actual cost to openAI. They seem to be selling at a loss, and they may be selling at an even greater loss to make it look like they are progressing. The second openAI seems like they have plateaued, their stock evaluation will crash and it will be game over for them.
I based my argument on actual numbers that can be looked up and verified. You "believe" that they "seem" to be doing something else. Based on what?
Their point is that those API prices might not match reality, and the prices may be artificially low to build hype and undercut competitors. We don't know how much it costs OpenAI, however we do know that they're not making a profit.
Or it might not. It would be a huge short term risk to do so.
As FaceDeer said, that we truly don't know.
OpenAI are not profitable today, and don't estimate they'll be profitable until 2029, so it's almost guaranteed that they're selling their services at a loss. Of course, that's impossible to verify - since they're a private company, they don't have to release financial statements.
There's a difference between selling at a loss, and having a loss.
OpenAI let's people use models for free with very little limits other than reducing the model quality over time, and they have very generous limits before they limit you at that.
That all costs money and is a loss for them.
If they get someone who's willing to pay, and they charge $20/m and on average, they net $5 profit per customer, they aren't selling it at a loss, they just need more customers. It's possible that a paid customer uses it even more though and it actually does incur a loss per paid customer and they're doing that to try and gain users while they figure out how to lower their costs, but that seems less likely.
That’s not what I’m saying. They’ve all but outright said they’re unprofitable.
But revenue is increasing. Now, if it stops increasing like they’ve “leveled out”, that is a problem.
Hence it’s a stretch to assume they would decrease costs for a more expensive model since that would basically pop their bubble well before 2029.
Revenue is increasing, but according to their own estimates, it has to increase 10x in order for them to become profitable.
Sure, they might not. But he gives no basis for saying that other than what he "believes."
People in this community, and on the Fediverse in general, seem to be strongly anti-AI and would like to believe things that make it sound bad and unprofitable. So when an article like this comes along and says exactly what you want to believe it's easy to just nod and go "knew it!" Rather than investigating the reasons for those beliefs and risking finding out something you didn't want to know.
It is unprofitable, though.
OpenAI recently hit $10 billion in ARR and are likely to hit $12.7b by the end of the year, but they're still losing a lot of money. They don't think they'll make a profit until 2029, and only if they hit their target of $125 billion revenue. That's a huge amount of growth - 10x in 4 years - so I'm interested as to if they'll actually hit it.
Okay, make it sound worse and even more unprofitable.
Making their AI models cheaper to run (such as by requiring less electricity) is one step along that path to profitability.
To be fair, OpenAI's negative profitability has been extensively reported on.
Your point stands though; there's no evidence they're trying to decrease revenue. On the contrary, that would be a huge red flag to any vested interests.
How does OpenAI getting less money (with a cheaper model) mean more profit? Am I missing something?
Usually, companies will make their product say 25% cheaper to produce, then sell it to the public at a 20% discount (while loudly proclaiming to the world about that 20% price drop) and pocket that 5% increase in profits. So if OpenAI is dropping the price by x, it's safe to assume that the efficiency gains work out to x+1.
Thanks! This makes sense, however OpenAI are not yet profitable. It's definitely possible that they're losing less money with the new models, though.
That "not profitable" label should be taken with a grain of salt. Startups will do all the creative accounting they can in order to maintain that label. After all, don't have to pay taxes on negative profits.
In the end, it still means their losses are greater than their profits.
They've still got taxes they need to pay, too - things like payroll taxes, real estate taxes, etc.
If the model is cheaper to run then they are able to reduce the price without reducing profit, which gives them an advantage over competitors and draws in more customer activity. OpenAI is far from a monopoly.