DeepSeek R1 offers input tokens at $0.55 per million—less than half of GPT-4’s $1.25. This aggressive pricing from a Chinese competitor suggests the commoditization of AI inference is accelerating faster than Western incumbents anticipated.
The Token Pricing framework shows a market in dramatic flux. December 2025 pricing reveals a 40x spread between cheapest and most expensive options:
Chinese AI companies operate under different cost structures and strategic imperatives. Government subsidies, lower labor costs, and less shareholder pressure for near-term profitability allow aggressive pricing that Western companies struggle to match.
The 280x price collapse from 2022-2024 may have just been the beginning. If DeepSeek’s pricing becomes the benchmark, the entire industry’s revenue assumptions need revision.
Strategic Implications:
AI inference is commoditizing faster than training
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
