OpenAI's new model cuts prices again
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OpenAI has launched a cheaper GPT-6.1 Terra model, costing up to half as much per token as the previous version.
Why it matters: Prices for tokens — a basic unit for AI usage — have been falling sharply, raising questions about both the strength of the demand for AI and how much revenue the data center boom will ultimately create and shower on investors.
The latest: According to an AI token price index from corporate expense management firm Ramp — which uses actual corporate spending on AI from Anthropic and OpenAI to generate its numbers — token prices have dropped to roughly 59 cents per million tokens as of last Friday.
- That's down roughly 35% since the end of June.
Zoom out: Essentially, a price war has broken out between the two giant AI model makers — not something that usually happens during periods of soaring demand.
Yes, but: Token usage has also surged, evidence, AI boosters say, that as the cost of AI computing power declines, adoption of the technology will surge, delivering the riches everyone seems to be counting on.
The bottom line: That may be true. But what investors are concerned about isn't token usage, but token spending, which is a matter of both usage and prices.
- And recent numbers, also from Ramp, show what looks like a flattening in spending growth.
