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It’s good to be aware when you’re buying something that’s subsidized. No need to downplay the importance of awareness.

by cj 9d ago

skybrian 9d ago
Aware of what, though? We don't actually know OpenAI's profit margins on inference. Do we need to know? It's enough to know that the market is competitive and new models with better prices are released often. This means you should have a way to switch models.
- cj 9d ago
  The entire market is subsided more than it is competitive. The market wouldn’t exist the same as it does today if it weren’t being propped up. Thats the point. I remember the days when I had a $2000+ credit balance on Uber because I mastered their referral program. “Free” uber blacks for 2 years! When you’re using free shit that you should probably be paying more for, it’s good to not fool yourself. In the Uber example, the fact that Lyft also existed at the time didn’t matter to me as someone happily riding around the city in Uber Black for $0. Unfortunately Lyft’s referral program wasn’t so lucrative so I couldn’t switch…
  - fgkramer 9d ago
    How does this work with inference providers behind OpenRouter? Are you saying that all of them are actually losing money?
    - stymaar 9d ago
      Where can I sign up for a monthly subscription on OpenRouter instead of paying the real API price?
      - cuttothechase 9d ago
        Openrouter is not so open as well, right? They take the middle man cut by enforcing their own limit restrictions and 429s on top of the model provided limit restrictions and what not. Now why would I pay a middle man anything if I can get the same hosted model without their own whimsical service limits?
    - qlte 9d ago
      To the extent that the 3rd party inference resellers are a viable market because of Chinese/certain US AI labs (current) willingness to absorb substantial compute/R&D/data harvesting costs while releasing weights on permissive licensing terms for free, then yes, current pricing is distorted.
    - cj 9d ago
      > Are you saying that all of them are actually losing money? Are you saying these companies are operating on anything resembling a sustainable business model? I think not! If OpenAI needs to impose 5 hour limits during a time where they are aggressively trying to grow market share, what do you think they (or whatever the winning provider is) will do in 5 years once they IPO and need to boost margins? They won’t be as friendly with usage caps as they’re being now.
      - thejazzman 9d ago
        `needs to impose 5 hour limits ` I'm no OpenAI defender but that's like saying Apple is going bankrupt because they charge for their products. Why wouldn't they do everything they can to turn $20 users into $200 users?
      - solenoid0937 9d ago
        Exactly. It is common knowledge that all the AI companies have terrible margins. IMO tokens are the cheapest they'll ever be as these companies compete for users.
  - skybrian 9d ago
    Uber isn't a good comparison. LLMs are a national or global market, not a local one. Also: already driverless.
- MikhailTal 9d ago
  Aware that this is essentially a soon to be deprecated service. As any vendor you need to know the life expectancy of it, plus forecast/predict any pricing changes. You really do not want to become dependent. Even if competitors exist, there still some non trivial cost to switch
  - skybrian 9d ago
    My cost to switch is choosing a different model from a pulldown menu.
- solenoid0937 9d ago
  Aware that the rug will be pulled. The market runs at a loss
rgbrgb 9d ago
agree and underscores the idea that you should keep your setups portable between model providers by using external memory systems and connector gateways

It’s good to be aware when you’re buying something that’s subsidized. No need to downplay the importance of awareness.

by cj 9d ago

It’s good to be aware when you’re buying something that’s subsidized. No need to downplay the importance of awareness.

Aware of what, though? We don't actually know OpenAI's profit margins on inference. Do we need to know? It's enough to know that the market is competitive and new models with better prices are released often. This means you should have a way to switch models.

cj 9d ago
The entire market is subsided more than it is competitive. The market wouldn’t exist the same as it does today if it weren’t being propped up. Thats the point. I remember the days when I had a $2000+ credit balance on Uber because I mastered their referral program. “Free” uber blacks for 2 years! When you’re using free shit that you should probably be paying more for, it’s good to not fool yourself. In the Uber example, the fact that Lyft also existed at the time didn’t matter to me as someone happily riding around the city in Uber Black for $0. Unfortunately Lyft’s referral program wasn’t so lucrative so I couldn’t switch…
- fgkramer 9d ago
  How does this work with inference providers behind OpenRouter? Are you saying that all of them are actually losing money?
  - stymaar 9d ago
    Where can I sign up for a monthly subscription on OpenRouter instead of paying the real API price?
    - cuttothechase 9d ago
      Openrouter is not so open as well, right? They take the middle man cut by enforcing their own limit restrictions and 429s on top of the model provided limit restrictions and what not. Now why would I pay a middle man anything if I can get the same hosted model without their own whimsical service limits?
  - qlte 9d ago
    To the extent that the 3rd party inference resellers are a viable market because of Chinese/certain US AI labs (current) willingness to absorb substantial compute/R&D/data harvesting costs while releasing weights on permissive licensing terms for free, then yes, current pricing is distorted.
  - cj 9d ago
    > Are you saying that all of them are actually losing money? Are you saying these companies are operating on anything resembling a sustainable business model? I think not! If OpenAI needs to impose 5 hour limits during a time where they are aggressively trying to grow market share, what do you think they (or whatever the winning provider is) will do in 5 years once they IPO and need to boost margins? They won’t be as friendly with usage caps as they’re being now.
    - thejazzman 9d ago
      `needs to impose 5 hour limits ` I'm no OpenAI defender but that's like saying Apple is going bankrupt because they charge for their products. Why wouldn't they do everything they can to turn $20 users into $200 users?
    - solenoid0937 9d ago
      Exactly. It is common knowledge that all the AI companies have terrible margins. IMO tokens are the cheapest they'll ever be as these companies compete for users.
- skybrian 9d ago
  Uber isn't a good comparison. LLMs are a national or global market, not a local one. Also: already driverless.
MikhailTal 9d ago
Aware that this is essentially a soon to be deprecated service. As any vendor you need to know the life expectancy of it, plus forecast/predict any pricing changes. You really do not want to become dependent. Even if competitors exist, there still some non trivial cost to switch
- skybrian 9d ago
  My cost to switch is choosing a different model from a pulldown menu.
solenoid0937 9d ago
Aware that the rug will be pulled. The market runs at a loss

rgbrgb 9d ago

agree and underscores the idea that you should keep your setups portable between model providers by using external memory systems and connector gateways