OpenAI's ChatGPT Pro Subscription Faces Unexpected Losses Despite High Price Tag

ChatGPT owner OpenAI is losing money like anything and this is its biggest problem

Pretty recent reports have revealed that it actually costs a huge sum of money to run ChatGPT and thus OpenAI CEO Sam Altman is losing a significant amount of money. OpenAI is actually facing some significant financial challenges as OpenAI CEO Sam Altman revealed that the company is currently losing money on its $200 per month ChatGPT Pro subscriptions, reported Futurism. According to Futurism, in spite of having around 10 million paying subscribers, at the same time, the high operational costs associated with running advanced AI models have outstripped the revenue altogether. Sam Altman also noted that users are consuming resources at a much higher rate than anticipated while leading to unexpected huge losses. The operational expenses of the company OpenAI are actually staggering with estimates suggesting that OpenAI spends approximately $700,000 daily to run ChatGPT, asserted Futurism. This has raised severe concerns about the sustainability of its pricing model specifically when a single query can cost up to $1,000. The projected losses of OpenAI for the year 2024 are around $5 billion against revenues of $3.7 billion while prompting the board to acknowledge a need for more capital than previously anticipated. During such tough times, in response to these financial pressures, OpenAI is actually considering raising the subscription prices and restructuring its operations to attract new investments, noted Futurism. While OpenAI has already risen around $20 billion since its inception but on the other hand, achieving profitability actually remains pretty elusive as it navigates the complexities of scaling AI technology. OpenAI is actually facing some significant financial challenges as OpenAI CEO Sam Altman revealed that the company is currently losing money on its $200 per month ChatGPT Pro subscriptions. The operational expenses of the company OpenAI are actually staggering with estimates suggesting that OpenAI spends approximately $700,000 daily to run ChatGPT.

OpenAI Faces Losses on High-Cost ChatGPT Pro Plan, Reveals CEO

OpenAI's ChatGPT Pro Plan Struggles to Break Even Amid Heavy Usage OpenAI recently revealed that its $200-per-month ChatGPT Pro service, aimed at providing users with further artificial intelligence interfaces and tools, is currently unprofitable because many people have signed up for it for free, said Sam Altman in a post on X (Twitter). "I personally chose the price and thought we would make some money," Altman admitted, highlighting the unforeseen financial challenge. This plan was introduced last year, and it offers the users improved o1 "reasoning" AI model, increased work speed and such features as the Sora video maker. Nevertheless, as much as people find it easy to implement and participate in the plan, it is not generating the profitability standards required. The company OpenAI, which has attracted about $20 billion in funding over its lifetime, recorded $3.7 billion of income in the previous year but had an estimated $5 billion in losses. Daily operational costs for ChatGPT alone were estimated at $700,000, adding to the strain on the company's financial health. The plans come at a time when the OpenAI firm is seeking a corporate restructuring in order to attract more investors. The company has admitted that it requires more cash than previously expected as costs for recruiting, renting offices, and procuring AI systems increase. As a result of such issues, there are indications that OpenAI might be preparing to change its subscription pricing model in its different plans. Nevertheless, the company looks forward to increased future growth; it anticipates its annual revenue to be $100 billion by 2029 and challenge worldwide giants such as Nestlé. For now, OpenAI's journey to profitability hinges on balancing user accessibility with sustainable pricing, as it works to refine its business model in an increasingly competitive AI landscape.

It Costs So Much to Run ChatGPT That OpenAI Is Losing Money on $200 ChatGPT Pro Subscriptions

While trying its darndest to become profitable, OpenAI is still falling comically short -- which, since it's the 800-pound gorilla in the nascent AI industry, should probably give pause to its rivals both large and small. In a post on X-formerly-Twitter, CEO Sam Altman admitted an "insane" fact: that the company is "currently losing money" on ChatGPT Pro subscriptions, which run $200 per month and give users access to its suite of products including its o1 "reasoning" model. "People use it much more than we expected," the cofounder wrote, later adding in response to another user that he "personally chose the price and thought we would make some money." Though Altman didn't explicitly say why OpenAI is losing money on these premium subscriptions, the issue almost certainly comes down to the enormous expense of running AI infrastructure: the massive and increasing amounts of electricity needed to power the facilities that power AI, not to mention the cost of building and maintaining those data centers. Way back in spring 2023, analyst Dylan Patel told The Information that the company was likely spending around $700,000 per day running ChatGPT, or about 36 cents per query; nowadays, a single query on the company's most advanced models can cost a staggering $1,000. In other words, there's an inconvenient reality for anyone in the AI space trying to turn a profit, as OpenAI now is: the smarter these systems get, the more expensive they become to run -- which poses a major problem for pricing. To that end, the company's board of directors sheepishly admitted in an end-of-year blog post that OpenAI needs way more cash than it previously thought -- even though it secured $6.6 billion in funding just a few months prior. "We once again need to raise more capital than we'd imagined," the governing body wrote. "Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness." Though there have reportedly been internal talks to raise the price of a regular ChatGPT subscription (which currently costs a more modest $20 per month), that level of pricing increase doesn't seem like it'll keep up with the energy demands of powering the behemoth -- or the draw of shinier new toys.

Not even OpenAI's $200/mo ChatGPT Pro plan can turn a profit

comment Even at $200 a month for ChatGPT Pro, the service is struggling to turn a profit, OpenAI CEO Sam Altman lamented on the platform formerly known as Twitter Sunday. "Insane thing: We are currently losing money on OpenAI Pro subscriptions!" he wrote in a post. The problem? Well according to @Sama, "people use it much more than we expected." Altman's admissions come roughly a month after OpenAI revealed plans to charge customers $200 a month -- ten times the cost of its Plus subscriptions -- for the Pro tier of its ChatGPT service. For the extra cash, users gain unlimited access to its advanced voice, o1 pro model, "which uses more compute for the best answers to the hardest questions." Apparently, the pricey new tier is a little too popular, which seems to have taken Altman by surprise. In a separate post, he wrote that he'd "personally chose the price and thought we would make some money." Altman didn't elaborate on the problem, but it may have something to do with how OpenAI's o1 models work. Usually, with LLM inferencing a larger number of simultaneous users is advantageous for maximizing utilization - at least when you own or rent the hardware rather than paying by token. However, o1 uses a chain of thought (CoT) approach to generating responses. CoT works by breaking down problems into constituent steps required to solve them. The challenge with a chain of thought is it often involves generating far more tokens - how words, punctuation, and other jargon are encoded in large language models - than you would with a more traditional model like GPT-4. As we understand it, this process is obscured in OpenAI's o1 models through a pause while it's "thinking." In the end, only the final answer is provided to the end user. More tokens mean longer generation times, which ties up hardware like GPUs for extended periods, resulting in higher operating costs. What this means for ChatGPT Pro and whether OpenAI will increase or decrease subscription fees to bolster revenues or amortize the cost over a broader number of more casual users remains to be seen. We wouldn't be surprised to see OpenAI may walk back "unlimited" access to high cost models. Naturally, we reached out to OpenAI for comment; we'll let you know what we hear back. OpenAI's challenges generating a profit on ChatGPT Pro come just weeks after the AI poster child revealed its latest step in its plodding transformation from non-to-for profit. The latest shake up of OpenAI's corporate structure will see the for-profit wing of the business transition to a public benefit corporation (PBC), which it argues will clear the way to larger scale investment. Under the plan, the PBC will call the shots with regard to operations and business, while its non-profit arm will maintain a "significant interest in the existing for-profit," and will be responsible for things like hiring and charitable initiatives. This is a departure from OpenAI's already unorthodox approach, which saw the non-profit overseeing the for-profit. While Altman and crew sort out how to run a profitable business, the firm still has some runway, having just raised $6.6 billion in new funding back in early October. With the New Year here, it seems Altman hasn't lost his flair for the dramatic, sharing bold new predictions about where AI is headed next. In a winding blog post, the chief executive opined that he was now confident the company knew how to "build AGI [artificial general intelligence] as we have traditionally understood it," and that in 2025 the first AI agents would "join the workforce." If AGI weren't enough, Altman claims OpenAI is beginning to turn its attention to "superintelligence," which, if the genAI hype man is to be believed, will "massively accelerate scientific discovery and innovation well beyond what we are capable of doing on our own, and in turn massively increase abundance and prosperity." Prosperity for who, of course, remains an open question. ®

OpenAI is losing money on its pricey ChatGPT Pro plan, CEO Sam Altman says | TechCrunch

OpenAI CEO Sam Altman says that the company is currently losing money on its $200-per-month ChatGPT Pro plan because people are using it more than expected "I personally chose the price," Altman wrote in a series of posts on X, "and thought we would make some money." OpenAI launched ChatGPT Pro toward the end of last year. In addition to granting access to an upgraded version of OpenAI's o1 "reasoning" AI model, o1 pro mode, ChatGPT Pro lifts rate limits on several of the company's other tools, including its Sora video generator. OpenAI isn't profitable, despite having raised around $20 billion since its founding. The company reportedly expected about $5 billion in losses on $3.7 billion in revenue last year. Expenditures like staffing, office rent, and AI training infrastructure are to blame. ChatGPT was at one point costing OpenAI an estimated $700,000 per day. Recently, OpenAI admitted it needs "more capital than it imagined" as it prepares to undergo a corporate restructuring to attract new investments. To reach profitability, OpenAI is said to be considering increasing the price of its various subscription tiers; the company optimistically projects its revenue will reach $100 billion in 2029, matching the current annual sales of Nestlé.

OpenAI Is Losing Money on ChatGPT Pro Plan, Says CEO

Sam Altman reflects on ChatGPT's origins and significant governance challenges faced in 2024. OpenAI CEO Sam Altman revealed on Sunday that the company is currently losing money on its USD 200-per-month ChatGPT Pro subscription plan because people are using it more than the company expected. The ChatGPT Pro Plan costs USD 200 per month and offers the highest level of access. As of this writing, the subscription includes access to o1, o1-mini, GPT-4o, and advanced voice (audio only). Subscribers also benefit from o1 Pro mode, which uses more compute resources to deliver the best answers to the hardest questions. Additionally, the plan provides extended access to Sora video generation. There are two other tiers available: the Free plan and the Plus plan, which costs USD 20 per month and offers limited access to o1 and o1-mini. Despite recent funding and high valuations, OpenAI is not yet profitable. The company faces significant expenditures, including costs related to data centers, AI infrastructure, staffing, and office rent, among others, to keep its services operational. Also Read: OpenAI Raises USD 6.6 Billion to Accelerate AI Research and Expansion OpenAI aims to develop superintelligence -- AI systems with cognitive abilities far surpassing human capabilities in every domain. "We believe that, in 2025, we may see the first AI agents 'join the workforce' and materially change the output of companies," Sam Altman wrote. "We continue to believe that iteratively putting great tools in the hands of people leads to great, broadly-distributed outcomes." He added, "We are beginning to turn our aim beyond that, to superintelligence in the true sense of the word. We love our current products, but we are here for the glorious future. With superintelligence, we can do anything else. Superintelligent tools could massively accelerate scientific discovery and innovation well beyond what we are capable of doing on our own, and in turn, massively increase abundance and prosperity." Altman acknowledged that superintelligence might sound like science fiction but expressed confidence that, in the coming years, its potential will become evident. "We're pretty confident that in the next few years, everyone will see what we see, and that the need to act with great care, while still maximising broad benefit and empowerment, is so important. Given the possibilities of our work, OpenAI cannot be a normal company." Also Read: OpenAI Announcements in December 2024: From ChatGPT Pro to Sora In a blog post titled Reflections, Altman also looked back on the journey of ChatGPT. "In 2022, OpenAI was a quiet research lab working on something temporarily called 'Chat With GPT-3.5'," he wrote, adding, "We ended up mercifully calling it ChatGPT instead, and launched it on November 30th of 2022." He described how the project has now "transitioned into the next paradigm of models that can do complex reasoning," marking a shift toward Artificial General Intelligence (AGI). Altman also addressed past challenges, including his removal from OpenAI's board. "A little over a year ago, on one particular Friday, the main thing that had gone wrong that day was that I got fired by surprise on a video call, and then right after we hung up the board published a blog post about it. I was in a hotel room in Las Vegas. It felt, to a degree that is almost impossible to explain, like a dream gone wrong." Also Read: OpenAI Targets 1 Billion Users by 2025 with AI Innovations and Apple Partnership: Report He described the incident as a "big failure of governance by well-meaning people," acknowledging his own role in the situation.

Sam Altman says OpenAI 'losing money' on pro subscriptions By Investing.com

Investing.com-- OpenAI CEO Sam Altman said that the company is losing money on its pro subscription services, claiming that people were using it much more than expected. "Insane thing: we are currently losing money on OpenAI pro subscriptions! People use it much more than we expected," Altman said in a post on the social media site X on Sunday evening. OpenAI had in December launched a new subscription tier called ChatGPT Pro, which offers users nigh-unlimited access to ChatGPT tools for $200 a month. The subscription also provides exclusive access to a model called o1 pro mode that uses more computing power to provide answers. Apart from pro, OpenAI has a $20 monthly subscription for access to ChatGPT's latest model. The company also provides free access to the AI tool. ChatGPT was one of the fastest-growing applications in terms of users, seeing over a 100 million users within months of its launch in late-2022. But a slew of media reports over the past year underscored OpenAI's unprofitability, as the Microsoft-backed AI giant burnt through cash with rapidly increasing operational costs- tied largely to the high amounts of processing power required to run its flagship AI models. While OpenAI does generate steady revenue from its subscription services, especially through enterprise deals, its operational costs have largely overshadowed its income. A New York Times (NYSE:NYT) report in September said the firm was set to clock a loss of $5 billion in 2024, against revenues of $3.7 billion. The firm had in October completed a $6.6 billion funding round that valued the AI giant at $157 billion. Tech giants including Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation (NASDAQ:NVDA) had participated in the round.

Sam Altman Left Disappointed by o1 Pro

"I personally chose the price and thought we would make some money." OpenAI CEO Sam Altman said the company was not making money on its most expensive offering, the $200 ChatGPT Pro subscription. While this should not be surprising, given that OpenAI is a loss-making company, Altman revealed that he expected otherwise. "We are currently losing money on OpenAI Pro subscriptions! People use it much more than we expected," he said in a post on X. "I personally chose the price and thought we would make some money," he added. These expectations align with the company's plans to further transition away from a non-profit business model. In December of last year, OpenAI announced the $200 ChatGPT Pro plan. This plan includes all the features of the Plus plan and access to the additional o1 Pro mode, which is said to use "more compute for the best answers to the hardest questions". The model has been met with praise ever since its debut. There was initial scepticism when the high-price tag subscription was launched, but Altman clarified that it's not for everybody and a majority of the users will not need it. "Most users will be very happy with the o1 in the plus tier," he said, indicating that the $20 ChatGPT Plus plan would suffice for the majority. However, the problem seems to be OpenAI's overly expensive plans. It's recently announced o3 model ranks atop all benchmarking tests but has high costs. The model scored the highest in the ARC-AGI benchmark but costs a whopping $1000 per task. Recently, OpenAI CFO Sarah Friar suggested that the company may charge $2000 a month to replace humans with a PhD-level assistant. Overall, profitability will mean more than ever for OpenAI, which also dictates the definition of artificial general intelligence (AGI). As of now, the company defines it as "a highly autonomous system that outperforms humans at most economically valuable work." When they announce AGI, Microsoft, one of its major investors, will lose access to OpenAI's most powerful models. Microsoft does not want to settle for a subjective, vague definition of AGI, and both companies have reportedly agreed that AGI will only be achieved when OpenAI earns $100 billion in profits. In 2024, OpenAI reported a $5 billion loss on $3.7 billion in revenue. Reports suggest that it is unlikely to become profitable before 2029. However, reports also suggested that OpenAI was trying to remove the 'AGI' clause from their agreement. While OpenAI has yet to officially announce the 'profit-driven' definition for AGI, Altman said in a blog post that the company was ready to announce it in 2025. "We are now confident we know how to build AGI as we have traditionally understood it. We believe that, in 2025, we may see the first AI agents "join the workforce" and materially change the output of companies," he said.

OpenAI CEO Sam Altman Says Company Losing Money On ChatGPT Pro Plan - Microsoft (NASDAQ:MSFT)

OpenAI aims to develop superintelligent systems as critics question OpenAI's commercial ambitions. On Sunday, Microsoft Corp MSFT backed OpenAI CEO Sam Altman disclosed that the company is currently operating at a loss on its $200 per month ChatGPT Pro plan. Although the plan was designed to generate revenue, it is not producing the profits OpenAI had anticipated. Altman shared his thoughts on the issue through a series of posts on X, stating that the price was set under the assumption that it would help the company earn revenue, but usage has exceeded their expectations. "we are currently losing money on openai pro subscriptions! people use it much more than we expected," he said. OpenAI launched ChatGPT Pro late last year to offer its users an upgraded experience. The new plan offers unlimited access to all of OpenAI's models, including the advanced "o1" reasoning model. Internal testing showed a 34% reduction in major errors on difficult questions compared to the preview version. Despite the promising features, OpenAI has yet to reach profitability despite raising $20 billion since its inception, TechCrunch reported. In October, the company secured more than $6.5 billion in new funding at a valuation of $157 billion. The latest funding is said to be one of the largest private investments ever alongside SpaceX and TikTok parent ByteDance. Also Read: Tesla Hits Record EV Sales In China Despite Global Dip: Report It is to be noted that the company plans to transition from being controlled by a nonprofit board to a new structure, paving the way for an initial public offering (IPO) in the future. However, Billionaire and OpenAI co-founder Elon Musk has filed for an injunction to halt the transition, accusing OpenAI of deviating from its original mission. In 2023, the company projected losses of about $5 billion on $3.7 billion in revenue. High operating expenses, including costs of approximately $700,000 per day to support the ChatGPT platform, are contributing to its financial struggles. To counter these losses, OpenAI is exploring strategies to become profitable. One potential solution involves increasing the price of its subscription tiers. In December, OpenAI said it is planning to reach 1 billion users by 2025, driven by new AI products, infrastructure and partnership with Apple Inc. AAPL. Also, Sam Altman shared his thoughts in a blog post regarding the company's ongoing efforts to build artificial general intelligence (AGI) and its eventual goal of superintelligence. "With superintelligence, we can do anything else. Superintelligent tools could massively accelerate scientific discovery and innovation well beyond what we are capable of doing on our own, and in turn massively increase abundance and prosperity." Read Next: Biden Blocks $14.9B US Steel Takeover Photo via Shutterstock MSFTMicrosoft Corp$427.601.00%Overview Rating:Good62.5%Technicals Analysis1000100Financials Analysis400100WatchlistOverviewAAPLApple Inc$245.260.78% This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

If Sam Altman thinks OpenAI needs to raise ChatGPT prices, I might have to cancel my Plus membership

OpenAI's pricing strategy may push users toward competitors. OpenAI CEO Sam Altman has shared on X that that the company is losing money on the $200-per-month ChatGPT Pro plan. He didn't elaborate on if or how OpenAI might address that issue, but raising the price seems like an obvious option. Will that drive people away from the premium service? More importantly, will that trickle down to a higher price tag for ChatGPT Plus, which is currently $20? I've subscribed to ChatGPT Plus since it became available. I use it to experiment and test features for work, but I've also enjoyed playing with it in my own life to come up with dinner ideas, entertain children, and brainstorm gift ideas, among other tasks. Paying $20 a month for faster responses, better AI models, and early access to new features like the Sora AI video creator is a good deal. ChatGPT Pro scales up those benefits enormously, with access to the o1 pro mode model, along with unlimited use of Sora and higher rate limits on API calls. If you're a power user, a video content creator, or a software developer cranking out AI-driven projects, I'm sure the $200 a month might seem like a good deal, too. Altman's admission that Pro isn't covering its costs raises a big red flag. If Pro users are pushing the limits of what OpenAI's infrastructure can handle, and the company needs "more capital than it imagined," where does that leave the rest of us? If Pro's financial strain means OpenAI might bump up the price for Plus as well, I'll have to reassess whether I'm getting enough bang for my buck. Altman's comments also reminded me that it was rumored ChatGPT Plus would cost $42 per month before it came out. It's a number that feels absurd now, but if OpenAI had gone that route, I probably wouldn't have signed up, or at least not as readily. If Plus prices creep upwards to maybe $30, I might keep up my subscription, but I'd have to consider seriously if it's worth it. As much fun as Sora can be, I'm not editing blockbuster movies here. Plus, it's not like OpenAI's competitors are sitting still. Google Gemini and other competitors are offering bundles of bonuses for subscribers to premium features, often linked to other products like Google One. And OpenAI isn't exactly running on fumes. The company has raised billions in funding and expects to hit $11.6 billion in revenue this year. If it can't make its products sustainable without constantly squeezing its subscribers, that suggests deeper issues. One option sometimes floated is usage-based pricing, but that sounds like a logistical nightmare. Imagine being charged by the question or the word count when you use ChatGPT as an individual and not under a business account. Suddenly, you're overthinking every query: "Do I really need to ask GPT for help with this?" I'm sticking with ChatGPT Plus for now but keeping a finger over the metaphorical cancel button in case of major price increases. It's already annoying seeing the subscription prices rise unexpectedly for Netflix or Spotify, but I'd put up with more hassle to keep those services than I would ChatGPT Plus. I enjoy ChatGPT, but it's not $50 a month enjoyment.