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Comment by golergka | Hacker News Reader

> OpenAI spent 50% of its revenue on inference compute costs alone

This means that they operate existing models with very healthy 50% profit margin, that’s excellent unit economics actually. Losing money by investing more into R&D that you make is not the same as burning it by selling a dollar for 90 cents.

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You're ignoring the fact that there are more expenses than just inference. Salaries, infrastructure, training new models (a requirement for the model to stay up to date with the changing world)

You can't just eliminate all the costs except inference

50% margins would be actually low and concerning for a saas business. What makes software an attractive business is how well it scales. The standard for saas has been at least 80% or higher margins.

Most all saas accounts require lengthy and generous free trials and boy AI compute throws a bit of a hand grenade into that PLG strategy. It’s just new economics that the industry will have to figure out.

Revenue minus compute is not profit lol. You still have to pay salaries and rent on your buildings, which are usually the biggest expenses.

I’m confused. If 50% of the revenue goes to inference, that means the other 50% goes into research?

My understanding is it means half of what a subscriber pays is spent just on the compute required as you chat with the models. Which leaves the other have to be divided up among salaries, marketing, R&D, etc.

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