OpenAI priced GPT-5 so low, it may spark a price war

OpenAI astounded the tech trade for the second time this week by launching its latest flagship mannequin, GPT-5, simply days after releasing two new freely obtainable fashions beneath an open supply license.

OpenAI CEO Sam Altman went as far as to name GPT-5 “one of the best mannequin on the planet.” Which may be satisfaction or hyperbole, as Trendster’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, significantly coding. And, as Altman identified, one space the place it’s undoubtedly competing properly is value. “Very pleased with 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 widespread for coding-related duties. Google, nonetheless, expenses extra if inputs/outputs cross a heavy threshold of 200,000 prompts, which means its most consumption-heavy prospects find yourself paying extra.

However OpenAI is actually 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 widespread amongst programmers, each as a alternative inside widespread coding assistant Cursor and powering its personal such assistant, Claude Code. (Word that Cursor supplied GPT-5 as an choice 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 evaluate: “The pricing is aggressively aggressive with different suppliers.” (Emphasis his.)

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 unbelievable. Intelligence per greenback continues to extend.”

Some on X referred to as OpenAI’s charges for the mannequin “a pricing killer,” whereas others on Hacker Information are providing related reward.

Will opponents like Anthropic comply with? Will Google — who undercut OpenAI on pricing earlier than — get much more inexpensive? If that’s the case, we might be witnessing the beginning of a a lot awaited LLM value battle.

There’s little question a value battle can be welcome. The underlying economics of vibe-coding software suppliers, for example, is fairly shaky due to the excessive and unpredictable charges they should pay mannequin makers, as Trendster’s Marina Temkin experiences. And there are numerous startups constructing on high of AI fashions as properly.

Silicon Valley has been hoping that the LLM price-to-performance ratio will ultimately enhance, together with inference prices. Nevertheless it appeared like such an equalization might be years away because the tech trade invests a whole lot of billions to construct knowledge facilities and infrastructure to assist rising AI demand. 

OpenAI itself has a $30 billion-per-year contract with Oracle for capability, when it solely just lately hit annual recurring income of $10 billion. In the meantime, Meta plans to spend as much as $72 billion on AI infrastructure in 2025, and Alphabet has put aside $85 billion for capital expenditures in 2025, pushed by AI wants. Within the face of such monumental bills, prices usually go a method: upwards.

Given such investments, it might be too quickly for startups taking a look at their rising mannequin API payments 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.