ChatGPT Pro Losing Money, OpenAI CEO Admits

OpenAI's ChatGPT Pro Facing Unexpected Costs

Sam Altman, CEO of OpenAI, revealed on Sunday that the company is currently experiencing financial losses with its ChatGPT Pro plan, priced at $200 monthly.

This is due to a higher-than-anticipated level of user engagement with the service. Altman stated he personally set the price, initially expecting profitability.

Details of the ChatGPT Pro Subscription

Launched in late 2023, ChatGPT Pro provides access to an enhanced AI model, designated o1, including its "reasoning" capabilities and o1 pro mode.

The subscription also removes usage limitations on several OpenAI tools, notably the Sora video generator.

Initial Pricing Concerns and User Behavior

The $2,400 annual cost of ChatGPT Pro was initially met with some skepticism. The specific benefits of o1 pro mode were not immediately clear to all potential subscribers.

However, Altman’s recent statements suggest that those who opted for the plan are utilizing its features extensively, resulting in increased operational costs for OpenAI.

A History of Informal Pricing Strategies

This isn't an isolated incident of somewhat arbitrary pricing at OpenAI. Altman disclosed in a recent Bloomberg interview that the original premium ChatGPT plan lacked a formal pricing study.

“We tested prices of $20 and $42,” Altman explained. “$42 was considered too high, while $20 was readily accepted.” The decision was made quickly, without extensive market research.

OpenAI's Financial Situation

Despite raising approximately $20 billion in funding, OpenAI remains unprofitable. The company projected losses of around $5 billion against a revenue of $3.7 billion for the previous year.

Significant expenses, including personnel costs, office space, and the infrastructure required for AI model training, contribute to these losses.

Future Plans and Potential Price Adjustments

ChatGPT once incurred an estimated daily cost of $700,000 for OpenAI. The company has acknowledged the need for additional capital as it undergoes restructuring to attract further investment.

To achieve profitability, OpenAI is reportedly evaluating potential increases to its subscription pricing tiers. Altman also indicated a possible shift towards usage-based pricing for certain services.

Revenue Projections

OpenAI maintains an optimistic outlook, forecasting revenue of $11.6 billion this year and a substantial increase to $100 billion by 2029.

This projected revenue would align with the current annual sales of a major global corporation like Nestlé.

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