OpenAI is preparing to start raising the price of ChatGPT Plus, with yearly increases reportedly bringing the price to $44 per month in five years.
OpenAI is the world’s leading AI firm, but the company is spending money at an extraordinary rate. As the company transitions from a nonprofit to a for-profit company, the pressure is on to become profitable and justify the billions of dollars being spent to develop AI models.
Catch our chat on OpenAI hiking the ChatGPT Plus price!
OpenAI is in the midst of a new round of funding, with the goal of raising “several billion dollars.” According to The New York Times, as part of its fundraising, OpenAI is sharing documents that detail its plans to achieve profitability.
Key to those plans is charging its 10 million paid ChatGPT users more per month. A ChatGPT Plus subscription currently costs $20 per month, but OpenAI plans to raise that by $2 by the end of 2024. Over the next five years, the company will continue to raise the subscription’s price until it reaches the target $44 per month.
While expensive, the price is certainly much less than the $2,000 per month ideas that were being floated within the company in early September.
AI Still Has a Value Proposition Problem
Ultimately, OpenAI’s plans to raise prices illustrates the problem companies are still trying to address: demonstrating that AI is enough of a game-changer to be worth paying what’s required to offset its cost.
As AI firms have burned through billions of dollars developing their models, the financial sector has begun to cool on the idea of continuing to invest at the same breakneck pace. In particular, AI’s relatively limited use cases—especially compared to the hype—are dampening investor enthusiasm.
“The expectations and hype around GenAI are enormously high,” Gartner analyst Arun Chandrasekaran said in August. “So it’s not that the technology, per se, is bad, but it’s unable to keep up with the high expectations that I think enterprises have because of the enormous hype that’s been created in the market in the last 12 to 18 months.”
“To be sure, Generative AI itself won’t disappear,” Chandrasekaran explained. “But investors may well stop forking out money at the rates they have, enthusiasm may diminish, and a lot of people may lose their shirts. Companies that are currently valued at billions of dollars may be sold, or stripped for parts.”
If OpenAI does raise prices at the rate its internal documents suggest, it could prove to be a litmus test for just how much people are willing to pay for something that still has limited usefulness.
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