OpenAI Cuts Prices on AI Models to Boost Competition
July 30 — OpenAI has announced significant price reductions for its smaller and mid-tier AI models, a decision aimed at intensifying competition in the tech industry. As American companies face rising costs and competition from cheaper Chinese alternatives, these changes come at a crucial time.
The pricing for OpenAI’s less powerful GPT-5.6 Luna model has been lowered by an impressive 80%, while the mid-tier Terra model receives a 20% cut. The flagship Sol model, however, remains at its current price.
These adjustments reflect how companies are reassessing their pricing strategies amid growing scrutiny of AI expenses. Many tech leaders have pointed out that more affordable AI options are essential for wider adoption of this technology.
The new pricing strategy also increases the pressure on Anthropic, whose Claude models have been popular among enterprise users but remain on the pricier side. Competing open-source models from Chinese firms, like Z.ai’s GLM-5.2, provide similar performance at much lower prices.
Experts believe that reducing prices could lead to increased usage of OpenAI’s and Anthropic’s technologies, even if it may strain their finances ahead of expected initial public offerings (IPOs).
Even though the price cuts are limited to OpenAI’s smaller models, the company believes businesses will benefit as these models can now perform tasks that previously required more expensive options.
With the new pricing, costs for using OpenAI’s models are significantly reduced. For example, sending text to Luna now costs 20 cents per million tokens, down from $1. For Terra, the price for sending tokens has dropped to $2 from $2.50, and the cost of generating responses is now $1.20, reduced from $6.
In comparison, Anthropic’s Claude Sonnet 4.6 model charges $3 per million input tokens and $15 per million output tokens, making it more expensive than OpenAI’s Terra model.
OpenAI credits these lower prices to improvements in efficiency and performance from the GPT-5.6 model, which has optimized its development processes.
While AI token prices have generally been falling over the past year, completing tasks has become costlier as companies move from flat-rate subscriptions to usage-based pricing. This shift has made expenses less predictable for businesses, often resulting in higher-than-expected bills.
Reporting by Aditya Soni in Bengaluru and Deepa Seetharaman in San Francisco; Edited by Devika Syamnath
