Some friends and I did a "just for fun" calculation on what price AI should really have using some of business and infrastructure experience.

The three of us have a decent amount of years in adjacent fields, still this is more like a "trust me bro comment". Anyway, we came to a subscription price of 120-150 USD/mo and we did this 6 months ago when the world wasn't yet the chaos it is right now. If those number had to be adjusted, a quick calculation would put it already close to the 200 USD/mo mark so there a decent margin after taxes.

That said, of we are anywhere close to be correct on this, I think that increase the price of the product by 10x will drastically reduce the number of users which will then drastically reduce the hardware required.

And even if we are off by the double, it would still be a 5x price increase would cause similar effect.

Speculation on my part is that it needs to be cheap because they need as much as human generated content as possible as they are running out of data and the models have plateau'ed. We don't see that thing of models getting 10x smarter anymore and maybe we see they are getting smaller or more specialised.

Ofc, disruptive research might come up, but my guess is that this price is both a incentive and a requirement for this business to not break apart.

your $120-150/month gut feeling is basically where the math lands. $1.30/clip, 100 clips/month, you need $130 just to cover compute. $150 with margin, checks out. Problem is at 10x the price you lose 90%+ of users and the whole growth story is dead. Same thing that happened with ChatGPT Pro at $200/month honestly, barely anyone upgraded.