OpenAI, founded by Sam Altman and others, is facing unexpected financial challenges with its ChatGPT Pro subscription service.
Altman disclosed today that despite a spike in user demand, the company is losing money on the $200/month plan.
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Unforeseen demand
Altman expressed his surprise at the high usage rates in a post on X, stating, “Insane thing: we are currently losing money on OpenAI Pro subscriptions! People use it much more than we expected.”
The ChatGPT Pro plan, launched in late 2024, offers access to advanced features like the o1 Pro model and removes rate limits on other tools.
However, operational costs have skyrocketed beyond initial projections.
Despite raising approximately $20 billion since its inception, OpenAI reported losses of around $5 billion for 2023 against revenues of $3.7 billion.
Key expenses include staffing and infrastructure costs, with ChatGPT alone costing about $700,000 daily.
Altman noted that the company needs “more capital than it imagined,” prompting discussions about potential price increases for subscriptions.
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Future adjustments
As OpenAI prepares for corporate restructuring to attract new investments, the focus remains on achieving profitability.
Altman acknowledged setting the subscription price and initially believed it would generate revenue.
However, the overwhelming demand has led to reevaluating their financial strategy.
In reflecting on the company’s growth, Altman mentioned that OpenAI’s user base has expanded significantly from 100 million to over 300 million active users within two years.
He emphasised the importance of providing technology users find valuable, stating, “Most of all, we have continued to put technology out into the world that people genuinely seem to love, and that solves real problems.”
OpenAI’s financial struggles highlight the challenges tech companies face in balancing user demand with sustainable business practices.