OpenAI launches GPT-5 with aggressive pricing, sparking a potential AI model price war
OpenAI dropped GPT-5 days after releasing two new open source models. CEO Sam Altman called it “the best model in the world.” Benchmarks show GPT-5 slightly edges out competitors like Anthropic, Google DeepMind, and xAI in some tasks, but falls behind on others.
GPT-5 shines in coding tasks and undercuts rivals on price. The API charges $1.25 per 1 million input tokens and $10 per 1 million output tokens, with an additional $0.125 per 1 million cached input tokens. 
This mirrors Google’s Gemini 2.5 Pro basic subscription pricing, popular for coding, but Google adds extra fees past 200,000 prompts for heavy users.
GPT-5 massively underprices Anthropic’s Claude Opus 4.1, which starts at $15 per 1 million input and $75 per 1 million output tokens, despite Anthropic’s discounts for cached prompts and batch processing.
Coding platform Cursor went live with GPT-5 minutes after the announcement, showing strong developer interest.
Simon Willison, featured in OpenAI’s launch video, praised the model’s price:
“The pricing is aggressively competitive with other providers.”
OthersideAI CEO Matt Shumer also praised GPT-5 for being cheaper than GPT-4o:
“is cheaper than GPT-4o, which is fantastic. Intelligence per dollar continues to increase.”
The AI community on X and Hacker News calls OpenAI’s pricing a “pricing killer.”
Questions now: will Anthropic and Google slash prices to compete? This could trigger the AI model pricing battle developers have been waiting for.
This drop comes amid massive AI infrastructure spend — OpenAI’s $30B yearly Oracle contract, Meta’s plan to spend $72B in 2025, Alphabet’s $85B capex reserved for AI. Normally, costs rise. OpenAI’s move bucks that trend.
Startups feeling squeezed by model API fees may finally get relief — if others follow.
OpenAI just threw down the gauntlet twice this week on both AI model access and pricing. The industry is watching.
