WorkThe story, in brief
Ways to think about token pricing
AI pricing is about to enter a new era. Here's why today's margin goldmine won't last.
The KeyNews take
Why it matters
As AI supply constraints ease, token pricing will face structural pressure toward commoditization. This strategic analysis explores the economic equilibrium question that will reshape model lab business models and investor valuations.
The key facts
5 to knowCurrent supply crunch allows model labs to maintain high pricing power
Long-term question: will token pricing collapse to commodity margins as supply normalizes
Key variables: supply, demand, price, capacity utilization, and capex requirements
Structural economics of model infrastructure vs. software moats
Author: Benedict Evans (influential tech strategist)
Go to the source
Benedict Evansben-evans.com
Publisher excerpt: AI is in a supply crunch today, but what happens when we come out of it? How and where will supply, demand, price, capacity and capex get back into equilibrium? Today, model labs can name their price, but why won’t they end up as low-margin commodity infrastructure?