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Outsourcing plus local AI will soon become more economical vs. frontier labs
311–320 of 408 posts
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#312When discussing LLM pricing, people are missing the plot. The subscription token price is 10x-40x cheaper than API pricing. Your 90$ Claude subscriptions give you close to $1000 to $4000 in equivalent API token pricing. The second issue is that the quality of the model “operator” makes a massive difference in the outcomes. Highly skilled senior devs who know how to prompt and have high agency will outperform team peo…
> The subscription token price is 10x-40x cheaper than API pricing This is a temporary phenomenon. Expect either drastic price increases or draconian throttling or both in the coming months. These companies are operating at huge loses and have hundreds of billions in liabilities and commitments. They need to turn on the money faucet sooner than later.
the alternative is that api prices change to be more in line with deepseek's
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#313Earlier quoted context omitted.
Selling inference for more than inference costs is not incompatible with bleeding cash at ungodly rates. They do in fact pay ungodly amounts of cash for other things, like training, marketing, etc. Heck, you can bleed cash while being profitable (in the accounting sense) Also, API prices going up a lot every new version is more an OpenAI thing, and even there it's a recent trend: GPT 5.0 was a big price drop compared…
But explain to me how these companies will recoup these costs outside of increasing inference pricing? Their business model is selling inference but the training and other costs have to be accounted for somehow. Unless I'm missing something obvious, inference costs must go up drastically if these companies are going to survive beyond the subsidy stage.
Obviously they need more paying users. The entire game in tech is taking advantage of (comparatively)low marginal costs to pay off capex once you corner the market
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#314Why would you ever offshore again now that we have LLMs? Offshored work was famous for its terrible quality and high prices, you'd just have to go back on everything, sit in a ton of useless meetings, make sure that you had very, very detailed design documents with every little piece accounted for. Now you can put those detailed documents into the LLM and get a better result back in a couple of hours rather than week…
There are plenty of folks that either don’t have a sense of pride or ownership for the products they are associated with. Or, they just do not have a deep sense of what it actually takes to ship quality products. You’d be surprised at how some less desirable places to practice software engineering are run.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#315I have really been trying to get local models to work. I have tried different harnesses, tooling, skills, prompts, etc. But when I compare claude code with anthropic models or codex with gpt 5.5, vs qwen, glm or gemma and the same harnesses, the frontier models come out massively ahead. I am at the point where I just don't see the point of the non-frontier models, they waste more time than they save.
Same. It pains me to hear quibbling about spending or reimbursing $200/month for codex or Claude plans . These are virtually inexhaustible for me as a software engineer and seem like a steal given the gains in efficiency.
And, who wants to screw around with harnesses or define agent orchestration when Claude/codex are good at this and getting better every month.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#316The more likely senario is that the bottom will disappear while the top becomes more productive via frontier models. The weaker a developer is the higher capability AI requires. The entire premise of this article does not work because it confuses weak developers with weaker ai being better than strong developers with near atonomous ai. The weak developers with frontier ai already produce products that are worse than…
I a so happy that I currently work at a job with mostly competent senior engineers for once in my life. The nightmares of contractors or overhired new grads without supervision would just be so much more devastating on an organization these days.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#317Earlier quoted context omitted.
The point is to not indenture yourself to a corporation whose motives do not align with your own.
Their motives are to make the best product to compete in a very competitive market.
They're trying to make the product sticky while they're still subsidizing the subscription price. The plan is to raise prices when you're addicted.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#318Earlier quoted context omitted.
The SSD would wear out in days while the laptop generates two responses a day. This is like saying you could power your home with AA batteries, yes technically you could but in practice entirely infeasible.
There is no wear on the SSDs, because the weights are just read, they are not written during inference. For model training, the requirements are very different, and the training of a big LLM cannot be done with home equipment. On the other hand, inference can be done on almost any PC, even for LLMs with thousands of billions of parameters, just very slowly. The only problem is that the inference becomes limited by th…
Does more RAM increase performance? This approach sounds like it could eventually be fast enough for local use as hardware and models improve.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#319Earlier quoted context omitted.
>they are subsidizing a huge amount of tokens at cost This is absolutely false, because other providers serving the Deepseek models on OpenRouter are also able to offer very low prices, and they don't have the money to subsidize anything.
Sure, but they didn't spend on training the model. If DeepSeek is providing the model for the same price as third parties, then it's probably still losing money when you account for the training.
Deepseek bypasses CUDA and has a few other optimisation that neither llama.cpp or vLLM support.
Furthermore, V4 pro was designed to run on 4 Huawei Ascend GPUs which are much cheaper than the nvidia setup others use, and deepseek probably also got some free hardware for their collab.
Hence it is entirely possible their inference costs are significantly lower than other providers.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#320[deleted]