Openai Might Raise The Price Of Chatgpt To $22 By 2025, $44 By 2029
OpenAI Contemplates Significant Price Hikes for ChatGPT Subscriptions
OpenAI, the company behind the revolutionary AI chatbot ChatGPT, is considering a substantial increase in the subscription fees for its service, according to internal documents reviewed by The New York Times.
Current and Projected Pricing
As of now, the monthly subscription fee for ChatGPT Plus stands at $20. However, OpenAI plans to raise this fee to $22 by the end of 2024. In a more aggressive move, the company aims to increase the subscription cost to $44 per month over the next five years, with the target price point expected to be reached by 2029.
Financial Context
Despite the impending price hikes, OpenAI is currently facing significant financial challenges. The company's monthly revenue has surged to $300 million in August, representing a staggering 1,700% increase since the start of 2023. For the entire year, OpenAI projects approximately $3.7 billion in revenue, with $2.7 billion coming from ChatGPT subscriptions and an additional $1 billion from other businesses leveraging its technology.
However, these revenue gains are overshadowed by substantial losses. OpenAI is expected to incur losses of about $5 billion this year, primarily due to high operational expenses such as employee salaries, office leasing, and the costly computing resources provided by its partner and main investor, Microsoft. The daily cost of running ChatGPT alone has been reported to reach as high as $700,000.
Investor Funding and Valuation
OpenAI is currently in the midst of a major funding round, seeking to raise $7 billion, which could value the company at an impressive $150 billion. This valuation is a significant leap from the $30 billion valuation just a year ago, reflecting the rapid growth and potential of the company. Key investors involved in this round include Thrive Capital, which has committed $750 million, as well as discussions with Microsoft, Nvidia, Tiger Global, and MGX, a technology investment firm linked to the United Arab Emirates. Notably, Apple is no longer in talks to participate in the funding round.
User Base and Revenue Projections
ChatGPT has garnered a substantial user base, with around 350 million users utilizing its services monthly as of June, up from approximately 100 million in March. The service has seen a notable increase in usage after allowing users to access it without requiring account creation or login. Currently, about 10 million users pay the monthly subscription fee for ChatGPT Plus.
OpenAI forecasts that its revenue will more than triple in 2025 to $11.6 billion and eventually reach $100 billion by 2029. This growth is expected to be driven by both the increased subscription fees and the expanding adoption of its AI technologies by other businesses.
Potential User Reaction and Business Implications
The planned price increases could lead to mixed reactions from users. While some may find the current $20 monthly fee already high, others may be willing to pay more for the enhanced services provided by ChatGPT Plus. The risk of user attrition due to rapid price increases is a concern, as it could impact OpenAI's revenue growth.
Corporate Structure and Leadership
In addition to the financial and pricing strategies, OpenAI is also undergoing structural changes. The company is preparing to announce a new structure where its for-profit arm will no longer be subservient to the board of its nonprofit foundation. This shift follows recent executive departures, including the resignation of Chief Technology Officer Mira Murati, and reflects ongoing changes within the company's leadership and governance.
CEO Sam Altman, who was briefly ousted in 2023 but later reinstated, may receive a 7% equity stake in the company, potentially worth $10.5 billion if the reports are accurate. However, OpenAI has denied any specific discussions or decisions on this matter.