Price per 1M tokens is meaningless

Anthropic's own release announcement mentioned that it's less cost competitive per task than Opus at higher thinking levels. It's significantly cheaper at lower levels though.

I'm wondering if this is going to be a universal pattern of smaller models: they're less smart, so to achieve the same benchmark results they have to think a lot more and hence become expensive.

Benchmarks force models to solve the problem entirely by themselves, requiring thinking. But if you pair them with a smart model (who thinks and solves beforehand) they won't need to solve the hard parts and can run on low/med. I suspect that was Anthropic's intention.

The LLM itself produces one token. Some tool adds that token to the input and runs it again, flogging the horse. Downstream another tool, some kind of harness, tries to control this stream by injecting tokens into the context and then sending it to the inference tool, and then trying to pattern-match the output.

Finally, there you are on CodePorn.yata paying for an agent to generate code, paying for an agent to tell you what's wrong with it, and paying for an agent to make it differently bad, and hopefully move on to the next task.

If it still hasn't dawned on you that this isn't just a bubble, but a snake-oil-bubble-bath, just try to imagine the paradigm shift whereby you go on github.com, assign an issue to an agent, the agent fixes it by rewriting the application in Pascal but a reviewing agent catches that you wanted it to print a measurement in Pascals (pa), and you don't pay for the work or the review, you only pay for work that one or two reviewing agents determine is up to par.

Nobody is going to do that because as soon as they test it they're going to have to do some math that won't make sense without admitting/realizing it's not some near-sentient, AGI rating 0.9 intelligence, it's just a text prediction algorithm that can pull out entire sentences when you use it to infer output on topics it trained on.

Changing the fuel type, efficiency of your vehicle, driving distance, or driving conditions will all change how much it will cost you.

Fuel cost per unit volume does not become meaningless just because you are neglecting all of the other factors involved. That would be throwing away the only data point you have been using.

This is just asking for someone to amalgamate all of the factors involved into one simple, easy to game, index.

Some models I tried (Mistral I think) had better tok/s, and roughly same billion parameters / scores on various benchmark... But they were _so_ verbose, that they generated many more tokens compared to a Qwen model of same caliber to answer the same thing.

So even though it had better generated tok/s, because so many more were generated, the clock time was longer.

And this compounds over mutli-turns: more generated token means more context used in the next turn (until some compaction or something runs)

For example there's some benchmarks that show that Opus for any task that requires a higher than `high` level of effort, may have actually been cheaper to use Fable on low even though the cost per token is drastically higher

Similarly with GPT 5.5 vs Opus. They simply look at the dollar amounts the labs assign to each model and run with it.

But part of the issue compounds on the fact that there are many people who simply default to the smartest model/effort and don't actually vary their model per task. So in some sense I don't actually blame them very much.

EDIT: this is like saying hourly rate or salary is meaningless. Different people have different output. You have to evaluate performance.

EDIT2: just pray the LLM providers don’t start taking Patrick McKenzie’s advice and start charging based on “value delivered”

We've started trying to do some comparison videos to capture more of the UX vs speed vs cost stuff e.g. https://www.linkedin.com/feed/update/urn:li:activity:7479891... which one of my team did for my LinkedIn account (disclaimer: marketing)

(In this particular case Deepseek was way slower than GPT 5.5 but I think that's because it installed Libreoffice half-way through the task!)

The point at which the metrics become meaningless is when others become aware of them, and begin to optimise for them. Lines per code is is not a bad insight for development activity, only when the developers are not aware of the metric. Price per 1M tokens became meaningless when LLM providers started to optimise for it. It seems to be that Sonnet 5 is optimised to score well on AA intelligence whilst seemingly having a lower price per 1M tokens.

I think generally we are in an AI bubble, and it will at some point pop. The numbers simply don't make sense. I would gamble heavily on local cost per task to survive the LLM winter. Given that hardware is pretty much a fixed overhead, you probably want to optimise for task per kW - that's where I'm betting.

But I have a sinking feeling that many AI developers think “tokens” got their name from the same idea as “virtual tokens in a casino” which is more related to product pricing and business.

Other aspects are caching, often at 0.1X cost, where providers really differ in how efficient they are (Anthropic really good, Google not so much) and how chatty a model is (costing output tokens).

Pricing per token is at least reasonably straight forward. If you aren't getting value, you don't use the service. One doesn't buy a Ferrari and then complain that in their town Ferrari doesn't help them pick up women and hence it should cost less.

i've always wanted cost per prompt, but even that has too much variation.

The uncertainty of how to use this vastly vastly outweighs the price in a data centre - so buckle up, buy enoughbGPUs to experiment at a known cost and one day you will find the approach that gives you 10x returns - at that point pay any price per token but not till then