Openai Priced Gpt-5 So Low, It May Spark A Price War

OpenAI astounded nan tech manufacture for nan 2nd clip this week by launching its newest flagship model, GPT-5, conscionable days aft releasing 2 new freely disposable models nether an unfastened root license.

OpenAI CEO Sam Altman went truthful acold arsenic to telephone GPT-5 “the champion exemplary successful nan world.” That whitethorn beryllium pridefulness aliases hyperbole, arsenic TechCrunch’s Maxwell Zeff reports that GPT-5 only somewhat outperforms different starring AI models from Anthropic, Google DeepMind, and xAI connected immoderate cardinal benchmarks, and somewhat lags connected others.

Still, it’s a exemplary that performs good for a wide assortment of uses, peculiarly coding. And, arsenic Altman pointed out, 1 area wherever it is undoubtedly competing good is price. “Very happy pinch nan pricing we are capable to deliver!” he tweeted.

The top-level GPT-5 API costs $1.25 per 1 cardinal tokens of input, and $10 per 1 cardinal tokens for output (plus $0.125 per 1 cardinal tokens for cached input). This pricing mirrors Google’s Gemini 2.5 Pro basic subscription, which is besides celebrated for coding-related tasks. Google, however, charges more if inputs/outputs transverse a dense period of 200,000 prompts, meaning its most consumption-heavy customers end up paying more.

But OpenAI is really undercutting Anthropic’s Claude Opus 4.1, which starts astatine $15 per 1 cardinal input tokens and $75 per 1 cardinal output tokens. (Anthropic does, however, connection large discounts for punctual caching and batch processing — storing/reusing prompts and processing aggregate requests together.)

Anthropic’s exemplary has been highly celebrated among programmers, some arsenic a prime within celebrated coding adjunct Cursor and powering its ain specified assistant, Claude Code. (Note that Cursor offered GPT-5 arsenic an option minutes aft it was announced.)

Developers who person had early entree to GPT-5 are touting nan pricing. Simon Willison, 1 of nan developers featured successful OpenAI’s motorboat video, writes successful his review: “The pricing is aggressively competitive pinch different providers.” (Emphasis his.)

But GPT-5 is besides priced competitively pinch GPT-4o. OthersideAI’s co-founder and CEO, Matt Shumer (maker of HyperWrite), writes that GPT-5 “is cheaper than GPT-4o, which is fantastic. Intelligence per dollar continues to increase.”

Some connected X called OpenAI’s fees for nan exemplary “a pricing killer,” while others connected Hacker News are offering akin praise.

Will competitors for illustration Anthropic follow? Will Google — who undercut OpenAI connected pricing earlier — get moreover much affordable? If so, we could beryllium witnessing nan commencement of a overmuch awaited LLM value war.

There’s nary uncertainty a value warfare would beryllium welcome. The underlying economics of vibe-coding instrumentality providers, for instance, is beautiful shaky because of nan precocious and unpredictable fees they person to salary exemplary makers, as TechCrunch’s Marina Temkin reports. And location are countless startups building connected apical of AI models arsenic well.

Silicon Valley has been hoping that nan LLM price-to-performance ratio will yet improve, on pinch conclusion costs. But it seemed for illustration specified an equalization could beryllium years distant arsenic nan tech manufacture invests hundreds of billions to build information centers and infrastructure to support increasing AI demand. 

OpenAI itself has a $30 billion-per-year contract pinch Oracle for capacity, erstwhile it only precocious deed annual recurring gross of $10 billion. Meanwhile, Meta plans to spend up to $72 billion connected AI infrastructure successful 2025, and Alphabet has set aside $85 cardinal for superior expenditures successful 2025, driven by AI needs. In nan look of specified tremendous expenses, costs typically spell 1 way: upwards.

Given specified investments, it whitethorn beryllium excessively soon for startups looking astatine their rising exemplary API bills to rejoice from OpenAI’s lone move to little pricing. 

Yet this week, OpenAI threw down nan gauntlet to put unit connected prices not conscionable erstwhile but twice. We’ll spot if others follow.