- People are using ChatGPT so much that OpenAI is even losing money on its $200-per-month Pro subscriptions, said CEO Sam Altman.
Despite raising $20 billion and launching the world's flagship AI chatbot, OpenAI is still not profitable, and its CEO said it’s actually losing money on ChatGPT Pro subscriptions.
The company grew its weekly active users to 300 million last year. But CEO Sam Altman said in a post Sunday, “insane thing: we are currently losing money on openai pro subscriptions! people use it much more than we expected.”
The company has projected that it would record losses of about $5 billion and revenue of $3.7 billion for 2024, the New York Times reported in September. The company’s biggest cost is due to the computing power used to run ChatGPT. Not only does it require huge investments in data centers, it also demands vast amounts of electricity to run them.
When OpenAI changed the world of AI by launching ChatGPT in November 2022, the product was originally free, although not for long. OpenAI still maintains its free tier but added a Plus subscription for $20 per month in February 2023.
ChatGPT Pro launched late last year at $200 per month and offers users unlimited access to OpenAI’s latest model, OpenAI o1, as well as access to its Sora AI video generator.
In a reply to a user’s comment on his initial post Sunday, Altman said he personally chose the price for the Pro subscription and thought it would make money for the company.
The “insane” detail of OpenAI losing money on its Pro subscriptions comes after Altman revealed new details about how the pricing for Plus came about in an interview with Bloomberg Businessweek.
After ChatGPT’s popularity took off, OpenAI, which was started initially as a nonprofit, had to adjust.
“We had launched this with no business model or thoughts for a business model. I remember a meeting that December where I sort of said, ‘I’ll consider any idea for how we’re going to pay for this, but we can’t go on,’” Altman told Bloomberg.
But when it came time to actually name a price, the process wasn’t as extensive as one might expect for such a notable company.
“I believe we tested two prices, $20 and $42. People thought $42 was a little too much. They were happy to pay $20. We picked $20. Probably it was late December of 2022 or early January. It was not a rigorous ‘hire someone and do a pricing study’ thing,” he told Bloomberg.
Instead of giving users unlimited access for a flat fee, Altman said the company may consider usage-based pricing.
While ChatGPT is a curiosity for casual observers, some of the product’s power users have used it to replace Google, Altman said. Replacing Google search wasn't on Altman's radar when the company first launched ChatGPT, but search has become an essential use, he said.
“Honestly, since we’ve launched search in ChatGPT, I almost don’t use Google anymore,” he said.
