Lesson 1553 of 1570
How AI Companies Make Money (And Why It Matters)
The economics of AI explained — and why the free tier might disappear.
Lesson map
What this lesson covers
Learning path
The main moves in order
- 1The big idea
- 2token pricing
- 3subscription tier
- 4compute cost
Concept cluster
Terms to connect while reading
Section 1
The big idea
Every prompt you send costs the AI company real money in compute. The free tiers exist to hook users and gather training data. Understanding the underlying economics helps you predict what features will stay free, what will get paywalled, and how to be a smart consumer.
Some examples
- Most labs lose money on free users and barely break even on $20/month plans.
- Image and video generation cost 10–100x more than text.
- 'Pro' tiers ($200/month and up) are where labs cover their costs.
- Open models running on your own hardware can be effectively free per query.
Try it!
Look up the API price per million tokens for the model you use most. Calculate what your typical week would cost at that rate.
Key terms in this lesson
End-of-lesson quiz
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