GoKawiilToday I was setting up Hermes to see how it does with web research. I chose DeepSeek V4 because I know it is cheap, but seeing it’s pricing next to Anthropic and OpenAI ‘frontier’ models is crazy. Nearly a 50x price increase based on tokens alone, let alone how much pondering any of their models might fall into (using more tokens for the same task).
What worries me about this is that Anthropic and OpenAI seem to have backed themselves into a corner of high costs. Can they reasonably decrease their prices by 20-50x to compete with DeepSeek or Xiaomi’s Mimo?
Open Weight vs Low Cost
Are these models cheap because they are open weight and having hundreds or people stress test running them on different hardware helped to lower the cost? Or is it that they are being provided as loss leaders to drive the prices down?
How do you keep prices high for commodity products?
You manufacture scarcity. You sell luxury and premium branding. This is what OpenAI and Anthropic seem to be doing by gating ‘frontier’ model usage behind higher walls.
This is how luxury brands have sold cars and hand bags forever. They are clubs and status symbols for the rich and not meant to be widely distributed.
Will Anthropic & OpenAI lean on China fears to push bans on open weight models?
This has been my fear for a few months now and each week that goes by seems to support this. How do you manufacture scarcity? One easy way is to fear monger and get the government to help restrict access to competition.
Why not compete?
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