---
title: "The Unsustainable Subsidy"
description: "Three years of LLM pricing data: flagship prices dropped, then flipped upward, while budget models bounced back. Tokenizer efficiency softened the headline, but real costs are rising."
categories: ["AI"]
keywords: ["ai,","llm","pricing,","openai,","anthropic,","google,","gemini,","tokenizer,","subsidy"]
date: 2026-05-20
lastmod: 2026-07-20
canonical_url: https://www.tomtunguz.com/ai-model-inflation/
author: "Tomasz Tunguz"
---


Google's AI triples in price each year.

{{< email_image src="uhmruf896ftdcbh6wf8i" alt="Google Gemini: Flash and Pro Pricing" width="540" height="304" >}}

OpenAI's flagship model was seemingly subsidized for a while, before rising again.

{{< email_image src="xwyhnjwzt5xeh5gnswnp" alt="OpenAI API Prices: Flagship Falling, Then Rising Again" width="540" height="304" >}}

Anthropic's AI has been the same price for a little bit & decreased for the most powerful models.

{{< email_image src="vdjjlu7siakf8b9qklqo" alt="Anthropic API Prices: Opus, Sonnet, Haiku" width="540" height="304" >}}

Those are three very different pricing strategies. If we compare the absolutes, the data completes the picture.

| Vendor    | Model           | Input ($/1M) | Output ($/1M) |
| --------- | --------------- | ------------ | ------------- |
| Google    | Gemini 3.1 Pro  | $2.00        | $12.00        |
| Anthropic | Claude Opus 4.7 | $5.00        | $25.00        |
| OpenAI    | GPT-5.5         | $5.00        | $30.00        |

Google remains the low-cost player, increasing the price on all its models but still less than half of the competition. Anthropic had maintained a luxe pricing until late last year.

The pricing changes indicate changes in strategy : cuts when cash is plentiful & share matters. Increases when cash is tight & margins matter. The latter is the case for all three vendors now when capex spending continues to set records.