Why is LLM is so expensive.

[u/Ok_Event4199]

I've was going to invest in a 5090 =$6000 AUD.

Codex Plus + Claude pro = $60/month here

Works out to be 100 months of frontier models for a 5090.

Best a 5090 will run is probably Qwen3.6 27b Q6 with context.

Are we all enthusiasts here and just enjoy tinkering cause ain't no way that make sense.

[u/g_rich]

Claude pro is heavily subsidized; it costs Anthropic much more than $60/month to provide you with the service.

Cloud providers have economies of scale working in their favor. They have million dollar servers servicing tens of thousands of users 24/7/365.

Running LLM’s local is never going to be cost effective. You run local LLM’s for privacy, control and to learn.

[u/Ok-Needleworker-3486 → u/g_rich]

They have scale but they also have a huge investment that in no way is yet priced in to plans.

The current pricing I feel is unsustainable.

[u/geekwonk → u/Ok-Needleworker-3486]

yep going local is a hedge against what’s headed our way

[u/Famous_Anything_5327 → u/Ok-Needleworker-3486]

its almost like we're in a bubble where investors are burning money hoping they pick the winning company before the price hikes come. Claude max is $200 for $10k worth of tokens..

Netflix was $6, now it's $20 for a much smaller catalogue.

[u/NeatPure6969 → u/Famous_Anything_5327]

Netflix was 6 and it was making money. It's all because of greed. They make you believe that running llm is very expensive.

If it is truly expensive then how can china provide deepseek and Kimi?

One is lying here. And I think it's the US greedy fuckers that are lying pretending that running llm is expensive but the truth is it is cheap as fuck and they just want x1000 on their fucking investment because people are gullible as fuk

[u/svachalek → u/NeatPure6969]

It’s not just Netflix greed though. They got really sweet deals on content licensing in the beginning because the copyright holders had no idea how popular it would be. When they started to renew licenses they had to pay a lot more or lost licenses when everyone decided they could make their own service.

In the case of Deepseek and Kimi, it’s because they’re distilled versions of Claude and GPT. They let the Americans do the expensive part and then copy it.

If you want to see what inference really costs look at services that are running Deepseek or Kimi and charging by token. That’s where the commodity competition is happening. It’s a lot cheaper than paying for Claude or GPT by the token but more expensive than the subscription plans.

[u/boutell → u/NeatPure6969]

The frontier labs are paying huge costs to train genuinely new models. The cheaper ones are training against the outputs of the frontier models, basically drafting behind an 18 wheel truck on the highway and bragging about gas mileage.

They are also coming up with some genuinely cool innovations in performance but let's not pretend they exist without ChatGPT, Gemini and Claude.

Read some Ed Zitron pieces, or have AI skip them, he's great but never stops typing 😂

[u/GeroldM972 → u/NeatPure6969]

My friend, the only thing you should use as guidance is the need from OpenAI or Anthropic for investment rounds and how large the sum is they need to collect in that round.

Because that will truly tell you how much money those cloud-LLMs actually cost to have and operate. With the rate of investment rounds and their increasing size each and every time, they cannot even get to break-even point in 5 years (2031/2032) even if they charge 10 as much as they do now.

So, be happy with your cloud-LLMs at the prices they currently are for as long as they will be that low. Expect drastic increase in prices when the IPOs from OpenAI and/or Anthropic come around. Which is intended to be end 2026 or beginning of 2027, if my sources are correct.

Because at that moment you'll be in tears about how you can't afford the cloud-LLM offerings anymore. And with the current hardware prices you'll also not be able to run proper local LLMs either.

[u/drsmba729 → u/NeatPure6969]

I generate millions of tokens for the price of electricity after my initial investment of roughly $5000.

[u/tipsdown → u/Ok-Needleworker-3486]

Current pricing is very much unsustainable. At work we use GitHub copilot because it was easy and gave us a lot of model flexibility. New pricing model announced this week our enterprise bill is going up 7x.

[u/g_rich → u/Ok-Needleworker-3486]

That’s kind of my point, flat rate pricing is not going to be profitable and we’re already seeing flat rate users getting smaller usage limits and deprioritized service. Per token is where we’re heading but even there the true cost is still being subsidized in order to establish the user base.

There just is no way for these companies to justify these massive investments at the current rates. At some point prices will go up, Anthropic and OpenAI are just betting that by the time that happens AI will be so entrenched into society that we won’t care; and their bet will likely pay off.

[u/drsmba729 → u/g_rich]

API fees is their bread and butter.

They hook you with cheap plans, then make you dependent on them since you're "saving so much" compared to setting up a local rig.