Disclaimer 1: Our calculations are rough in places; information is sparse, guesstimates abound.

Disclaimer 2: This post draws from public info on FutureSearch as well as a paywalled report. If you want the paywalled numbers, email dan@futuresearch.ai with your LW account name and we’ll send you the report for free.

Here's our view of the unit economics of OpenAI's API. Note: this considers GPT-4-class models only, not audio or image APIs, and only direct API traffic, not usage in ChatGPT products.

As of June 2024, OpenAI's API was very likely profitable, with surprisingly high margins. Our median estimate for gross margin (not including model training costs or employee salaries) was 75%.
Once all traffic switches over to the new August GPT-4o model and pricing, OpenAI plausibly still will have a healthy profit margin. Our median estimate for the profit margin is 55%.
The Information implied that OpenAI rents [...]

The original text contained 1 image which was described by AI.

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First published:
August 27th, 2024

Source:
https://www.lesswrong.com/posts/SJESBW9ezhT663Sjd/unit-economics-of-llm-apis

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“Unit economics of LLM APIs ” by dschwarz, nikos, Lawrence Phillips

LessWrong (30+ Karma)

“Unit economics of LLM APIs ” by dschwarz, nikos, Lawrence Phillips