OpenAI is worried about its costs despite raising $20 billion in funding and growing to 300 million active users — and it’s all down to its popularity.
That's according to CEO Sam Altman, who earlier this month revealed the company was losing money on professional-level subscriptions despite them costing $200 a month.
The company unveiled its professional tier in December in addition to the $20 a month for standard users. Dubbed ‘ChatGPT Pro’, the service includes access to OpenAI's latest models, as well as faster processing, longer context windows, and advanced voice tools.
In a post on X, Altman said the tech giant was “currently losing money on OpenAI pro subscriptions”.
“People use it much more than we expected,” he added.
When asked by a follower if that was part of the plan to make the service look good, Altman disagreed.
"No, I personally chose the price and thought we would make some money," he said.
It's clear that AI developers are still trying to unpick how much to charge customers — and it’s a difficult balancing act as businesses remain unclear about return on investment for AI projects and as AI development costs continue to mount.
Altman has previously said that OpenAI launched ChatGPT with no real idea for a business model. In an interview with Bloomberg, he recalled a meeting just after its launch where he said: "I’ll consider any idea for how we’re going to pay for this, but we can’t go on."
Initially, Altman told Bloomberg the company came up with "some truly horrible ideas" and eventually settled on a subscription model.
The firm isn’t alone in its drive for subscription-based revenue streams. Earlier this month, Microsoft, which has invested billions in the firm, rolled out a new pricing structure for 365 Copilot Chat.
The standard version starts at $30 per person, but there's also a pay-as-you-go version to make it easier for companies to get started trialing the system.
Industry counterparts have also grappled with the idea of boosting revenue streams through a subscription-based model.
OpenAI’s continued losses and funding
OpenAI’s losses have been well publicized over the last few years. In September, the New York Times reported that the firm expected to make about $3.7 billion in revenue with costs of $8.7bn, suggesting an annual loss of $5bn.
This fueled concerns that the company was running out of money and risked facing bankruptcy unless it secured major funding.
But OpenAI answered that with a $6.6bn funding round in early October, valuing the AI leader at $157 billion. The investment round saw pledges from major industry players including Microsoft and Nvidia, as well as venture capital groups SoftBank and Thrive Capital.
OpenAI said at the time the money would help increase compute capacity and extend its leadership in the technology.
Of course, that sum — though significant — pays for less than a year of operating.
