alt Hacker NewsI believe they will last until they IPO, and not long after that. $200/mo plans are not good for their P&L when their users using $10000 worth api credits. That's -98% margin loss per user.
I believe they will last until they IPO, and not long after that. $200/mo plans are not good for their P&L when their users using $10000 worth api credits. That's -98% margin loss per user.
People point to the equivalent API costs to show that they are getting a great deal on the subscription, 10,000 dollars worth of tokens for 200 dollars. I do wonder if it's the other way around though - are the API users simply getting ripped off? I have seen Dario say in multiple interviews that they are profitable on inference, which maybe he was only meaning to refer to API usage, but that's not the impression I got.
It's not a 98% margin loss if your users are unwilling to pay 50 times the cost that they were previously paying, and if they have other options like open source providers. The calculus isn't so simple because some portion of users would switch to API, and so it's about how many would continue using the service rather than leaving for a competitor.
I'm aware they need to recoup the enormous cost of training and data centers, but on a purely inference cost level I'm not convinced that the 200 dollar plans are unprofitable.