OpenAI astounded the tech trade for the second time this week by launching its newest flagship model, GPT-5, simply days after releasing two new freely available models underneath an open supply license.
OpenAI CEO Sam Altman went as far as to name GPT-5 “the most effective mannequin on the earth.” Which may be pleasure or hyperbole, as TechCrunch’s Maxwell Zeff experiences that GPT-5 solely barely outperforms different main AI fashions from Anthropic, Google DeepMind, and xAI on some key benchmarks, and barely lags on others.
Nonetheless, it’s a mannequin that performs properly for all kinds of makes use of, notably coding. And, as Altman identified, one space the place it’s undoubtedly competing properly is value. “Very proud of the pricing we’re in a position to ship!” he tweeted.
The highest-level GPT-5 API prices $1.25 per 1 million tokens of enter, and $10 per 1 million tokens for output (plus $0.125 per 1 million tokens for cached enter). This pricing mirrors Google’s Gemini 2.5 Professional primary subscription, which can also be standard for coding-related duties. Google, nonetheless, charges more if inputs/outputs cross a heavy threshold of 200,000 prompts, that means its most consumption-heavy prospects find yourself paying extra.
However OpenAI is de facto undercutting Anthropic’s Claude Opus 4.1, which begins at $15 per 1 million enter tokens and $75 per 1 million output tokens. (Anthropic does, nonetheless, supply massive reductions for immediate caching and batch processing — storing/reusing prompts and processing a number of requests collectively.)
Anthropic’s mannequin has been extraordinarily standard amongst programmers, each as a alternative within popular coding assistant Cursor and for powering its personal such assistant, Claude Code. (Observe that Cursor offered GPT-5 as an option minutes after it was introduced.)
Builders who’ve had early entry to GPT-5 are touting the pricing. Simon Willison, one of many builders featured in OpenAI’s launch video, writes in his review: “The pricing is aggressively aggressive with different suppliers.”
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However GPT-5 can also be priced competitively with GPT-4o. OthersideAI’s co-founder and CEO, Matt Shumer (maker of HyperWrite), writes that GPT-5 “is cheaper than GPT-4o, which is incredible. Intelligence per greenback continues to extend.”
Some on X known as OpenAI’s charges for the mannequin “a pricing killer,” whereas others on Hacker Information are offering similar praise.
Will opponents like Anthropic comply with? Will Google — who undercut OpenAI on pricing earlier than — get much more reasonably priced? If that’s the case, we could possibly be witnessing the beginning of a much-awaited LLM value conflict.
There’s little doubt a value conflict could be welcome. The underlying economics of vibe-coding instrument suppliers, as an illustration, is fairly shaky due to the excessive and unpredictable charges they need to pay mannequin makers, as TechCrunch’s Marina Temkin reports. And there are numerous startups constructing on prime of AI fashions as properly.
Silicon Valley has been hoping that the LLM price-to-performance ratio will finally enhance, together with inference prices. However it appeared like such an equalization could possibly be years away because the tech trade invests lots of of billions to construct information facilities and infrastructure to help rising AI demand.
OpenAI itself has a $30 billion-per-year contract with Oracle for capability, when it solely lately hit annual recurring revenue of $10 billion. In the meantime, Meta plans to spend up to $72 billion on AI infrastructure in 2025, and Alphabet has set aside $85 billion for capital expenditures in 2025, pushed by AI wants. Within the face of such monumental bills, prices usually go a technique: up.
Given such investments, it might be too quickly for startups looking at their rising model API bills to rejoice from OpenAI’s lone transfer to decrease pricing.
But this week, OpenAI threw down the gauntlet to place stress on costs not simply as soon as however twice. We’ll see if others comply with.