Hacker News new | past | comments | ask | show | jobs | submit
baggachipz | on: Claude Fable 5
I don't see how it won't be. They lose insane amounts of money on subscription plans. I'm sure they still lose money on usage-based billing, but probably not as much.
JumpCrisscross | parent | next
> They lose insane amounts of money on subscription plans

Do we know this? I’ve seen evidence they lose money on heavy users. But so do gyms.

saaaaaam | root | parent | next
How do gyms lose money on heavy users? A heavy gym user isn’t really costing the gym anything extra as far as I can see.
JumpCrisscross | root | parent
> How do gyms lose money on heavy users?

Most gyms sell more subscriptions than they can fit under their roof at one time. If a gym only sells to heavy users, it will either be constantly turning members away or have to buy more equipment. Its equipment will wear off faster. Depending on amenities, it will go through towels, soap, water, et cetera faster, too.

tripleee | root | parent
Gym equipment lasts 10+ years in a commercial gym, at $50/mo that's a minimum of $6k paid from a single person.

Unless they're really, seriously wasteful with the soap.. there's no chance a gym is losing money on a heavy user

rafram | root | parent
It depends on the gym and their business model! A super-budget gym like Planet Fitness that charges $15/month is going to lose money on heavy users, but they count on most of their members being infrequent gym-goers. A luxury gym like Equinox that charges $300/month can target heavy users without any issues, and they'd actually rather members go more so they stay and spend money on expensive salads and smoothies.

Right now all these AI subscriptions are priced like Planet Fitness, but they're used like Equinox. They're hoping that the new a la carte offerings will move their pricing more in that direction as well.

charcircuit | root | parent
>I’ve seen evidence they lose money on heavy users.

Where?

JumpCrisscross | root | parent
There are tons of blog posts where folks work out the API cost of their usage and find it well above subscription cost.
otterley | root | parent | next
That doesn't mean the company is losing money in aggregate on these subscriptions. Buffets are still in business even though some people gorge themselves silly at them. The incremental cost may exceed the incremental revenue for a particular person or minority group, but that's not how these businesses measure profitability.
charcircuit | root | parent
There is a difference between making less profit and losing money. Comparing to API cost can only show the former.
cautiouscat | parent
I assume consumers aren’t a big note in their bottom line. I’m not actually very sure about that, just an assumption.

What I wonder however is if these tools will become something I use at work only. $100/month is already a massive stretch budget wise. If these models keep devouring tokens there’s no way I’d get the same usage time out of them for $100 in usage credits.

I just don’t think I’d use them much at all at home.