OpenAI CEO Sam Altman disclosed on Sunday that the company is incurring significant losses on its $200-per-month ChatGPT Pro subscription, as user demand has exceeded their expectations.
In a series of posts on X (formerly Twitter), Altman explained, “I personally decided on the price and assumed it would generate some profit.”
ChatGPT Pro, introduced late last year, offers users access to an enhanced version of OpenAI’s o1 reasoning model, known as o1 pro mode. The plan also removes rate limits on other tools, including the Sora video generator, making it an appealing option for heavy users.
However, the pricing of ChatGPT Pro has sparked debate since its debut. At $2,400 annually, some critics questioned the value proposition, particularly of the o1 pro mode. Yet, Altman’s remarks suggest that those who opted for the plan are leveraging it extensively, driving up operational costs for OpenAI.
This isn’t the first time OpenAI has approached pricing with a degree of informality. In a recent Bloomberg interview, Altman acknowledged that the company’s original premium ChatGPT plan lacked a formal pricing analysis.
“We tested two price points, $20 and $42,” Altman said. “Users felt $42 was too high but were comfortable with $20. That’s how we landed on the price. It wasn’t a rigorous pricing study.”
Despite raising approximately $20 billion in funding, OpenAI remains unprofitable. The company reportedly faced losses of $5 billion against revenues of $3.7 billion last year. High expenses, including staffing, office space, and the infrastructure needed to train AI models, are primary contributors to these losses. At one point, ChatGPT alone was costing the company an estimated $700,000 daily.
OpenAI recently acknowledged the need for more funding as it undergoes a corporate restructuring to attract new investments. To address financial challenges, the company is considering adjusting the prices of its subscription tiers. Altman also hinted at the possibility of introducing usage-based pricing for some services.
Despite these hurdles, OpenAI remains optimistic, projecting $11.6 billion in revenue this year and an ambitious $100 billion by 2029, matching current annual sales figures of global brands like Nestlé.
