AI Model Pricing Explained

AI model pricing can be confusing. Here's everything you need to know about how AI models are priced.

**Pricing Models:** - **Per-token pricing**: Most common. You pay per million tokens for input and output. - **Subscription**: Fixed monthly fee for a certain usage limit (ChatGPT Plus, Claude Pro). - **Batch processing**: 50% discount for non-urgent requests processed in batches.

**Key Cost Factors:** - **Input tokens**: The text you send to the model (your prompt) - **Output tokens**: The text the model generates (its response) - **Cache hits**: 90% discount for repeated prompts (cached by the provider) - **Reasoning tokens**: Extra tokens used by thinking models (billed as output)

**Price Ranges (August 2026):** - **Budget** (<$0.50/M output): DeepSeek V4 Flash, Gemini 3.5 Flash, Qwen models - **Mid-range** ($0.50–$5/M): GPT-5.4 mini, Claude Sonnet 4.6, Mistral models - **Premium** ($5–$30/M): GPT-5.5, Claude Opus 4.7, Gemini 3.1 Pro

**Cost Optimization Tips:** 1. Use caching for repeated prompts 2. Use batch processing for non-urgent tasks 3. Choose smaller models for simple tasks 4. Compress your prompts (remove unnecessary context) 5. Set max_tokens to avoid runaway generation