Hadley Wickham analyzed whether AI token prices are artificially low. He used Kimi K3 as a proxy for a frontier model. OpenRouter pricing for Kimi K3 ranges from $0.59 to $1.81 per million tokens. Self-hosting Kimi K3 costs about $23,000 per month for hardware and hosting. That setup can serve 124 billion tokens monthly at 75% utilization. Self-hosted cost per token is far lower than provider prices. Subsidies appear in subscription plans rather than per-token API costs. Closed models like Claude charge much higher prices than open ones. Training costs for open models are often covered by investors or governments. Wickham argues token prices reflect real infrastructure costs. He invites feedback on the analysis.
What it unlocks
Understanding that open model token prices reflect near-cost infrastructure rather than heavy subsidies.
- $0.25 per million tokens self-hosted
- $1.13 per million tokens via providers
- $200/month subscription vs $2,000–$10,000 token value
- $550,000 server cost
Sources