DeepSeek announced to raise its API price tremendously

Posted by alexwwang 1 day ago

My take: this notice from DeepSeek might actually be a brilliant marketing move. The logic here is to urge users to ramp up their usage over the next 2 to 3 months. By the time the price hike actually kicks in, newer models will likely have already drawn users away, and whenever DeepSeek drops its next, even stronger model, the new price point won't feel nearly as steep. It’s a clever way to dodge the dilemma Kimi and GLM found themselves in. Let's wait and see how it plays out.

Comments

Comment by real-zephex 9 hours ago

i couldn't even finish celebrate processing 54 million tokens for just $0.49 and they dropped this bomb

Comment by alexwwang 5 hours ago

54M tok is really not a big number, tbh. Hurry up dude, consume 54B before the boots touch down.

Comment by samuelknight 19 hours ago

They haven't revealed what they are changing in the price, but it's probably cache hit prices. They subsidized theirs to 10x less than normal to drive adoption. That's almost certainly below the cost of electricity for them.

Chinese model providers are in a bind because charging a reasonable margin will put them in competition with all the neoclouds that host their model weights without the development cost. Their economics are far more challenging than OpenAI/Anthropic/Google, who already have thriving high revenue business and mountains of compute online or coming online.

Comment by alexwwang 18 hours ago

Interesting insights. I will consider these factors. AFAIK, the electricity price is lower in China than in US.

Comment by willsmith72 16 hours ago

brilliant marketing? how exactly? more like how to undo any goodwill you've built with your customers.

the only competitive edge for someone like me who wants an api to call is price

Comment by alexwwang 15 hours ago

I might be the similar cat of user with you. But I have to say by now it push me to burn more token with it. No one could predict what will happen tomorrow and how high the price would bump to.

Comment by Jahnavi_Aleti 13 hours ago

So it’s less a price hike and more a 90-day all-you-can-eat buffet before the menu gets reprinted. Clever. Slightly evil. Very AI-industry.

Comment by alexwwang 12 hours ago

It's just a hypothesis, not proved.

Comment by thiago_fm 22 hours ago

It's exactly this. Not only this, we might be running very soon into cheap compute soon given the current CAPEX of all hyperscalers.

DeepSeek is model that you can run anywhere, meaning that any datacenter/company could run it at a price that would give them a margin taking in account running costs of the datacenter + depreciation.

I'm very sure we're overbuilding capacity, and we'll find out around 2027.

Those open weights will become extremely attractive because all that datacenter extra capacity laying idle will be possible to be used by builders.

It may be the case that in 2027-2028 will be cheaper to start a new AI model company from scratch to compete with Anthropic/OpenAI as you'll be able to:

- the new company won't be tied to so much capital, debt and running costs

- get much cheaper datacenters to train than it is Today, as the big labs will be stuck with bad infra contracts

- have great engineers/researchers willing to jump ship because if Anthropic/OpenAI valuation falls, that will destroy their equity

- wide available chinese models to distill from, papers and ideas on how to acquire datasets

Anthropic/OpenAI are playing an extremely risky game, they need to greatly keep doubling their bets and delivering model big performance increments.

If they don't give us ASI/AGI in 2 years or find huge new markets, there's no way the economics will make sense.

The execs forgot why AI models even exist (like huge usage for the cyber models, or new types of models)...

AI models' usage is mostly tied to build Software Today, that's where the value really lies now.

If there isn't enough Software to be built as people claim to the rate they expect, eventually the supply of AI models will outstrip the demand.

You can't sell pick & shovels infinitely, AI models themselves are also in that category.

Eventually you need enough holes to be dug, and gold to be struck, and nobody knows what's that demand. (even though they built all that supply...)

Comment by stockanalyst987 16 hours ago

Interesting perspective. Things are definitely going to change and open weight will have a huge impact in the US as token costs are way to high now. Definite impacts to Anthropic/OpenAI but let's not forget Meta and Grok are out there too and same with Gemini.

Infrastructure costs - great points. Are we really going to have datacenters in space? If so, what will be overall cost structure with launch being the new cost factor but basically eliminating power and cooling. If it does work and takes off, what about all those expensive data centers on earth that were built and are being built. I do not see much discussion on this but probably because it's not a definite data centers in space will happen and by when. Musk has done unbelievable things but usually not on his original timelines but years further out.

Comment by alexwwang 21 hours ago

I agree that the trend of token price should be going down but it should also consider the effect and gain per token so it varies among different models, mainly according to their capability and availability. There’s a long way to go before it meets the equilibrium state.

So I think we should not limit our field of view on software development but on realms where ai software has not penetrated yet. That’s the blue ocean for ai business. The forth industry revolution hasn’t begun yet. The new steam engine powered textile machine is on the stage of developing and experiment yet.

Comment by thiago_fm 20 hours ago

The question is whether they can penetrate those markets before going bankrupt

My take: no

They are still pretty much competing for software development, you see only tiny verticals being tried by OpenAI and Anthropic, with Claude Design et al

This can be better done by other companies, with a fresh balance sheet, don't you think?

There'll be plenty of people at Anthropic and OpenAI opening those companies

Comment by alexwwang 20 hours ago

I agree you on these issues. When we look back to the first and second industry revolution, how many companies survive to today since then? It takes time and it’s a relay game, but more fast than past.

So I think there’re huge opportunities for everyone involving in.

Talking back to deepseek’s announcement, I think it is smart and funny but we needn’t to be panic on this forecasted price rising at all. Just sit and relax, and wait for big news announced by other model players. At least glm 5.3 is on its way.

Comment by MRiabov 12 hours ago

As a ML/LLM engineer in a ecommerce analytics SaaS company, I can't stress how useful LLMs are for me, and gladly - for a 5-man company our LLM expenses are 1.5k including coding agents. Great ROI.