What Is ChatGPT, and How Does It Make Money?

ChatGPT is a conversational AI interface created by OpenAI, which combines the capabilities of genera-purpose large language models, like GPT-3, and it has been fine-tuned with a model called InstructGPT, which added a supervised learning method, which is human-in-the-loop, to increase truthfulness, and reliability of the conversational interface.

How does ChatGPT work?

To grasp large language models, it’s critical to understand a few key concepts.

Current large language models, like GPT-3, have been trained on a massive amount of data and billions of parameters, which were used to pre-train those models.

In the pre-training phase, through unsupervised learning, it’s possible to give the model a straightforward goal, like predicting the next token in the sequence.

In short, the main goal of a large language model like GPT-3 in the pre-training phase is the text-to-text prediction of what comes next in the text sequence.

Once the model has been pre-trained, it’s pretty good at general tasks. Though it can be misleading and untruthful, thus hallucinating often.

To “put some breaks” and enhance the guardrails of a general-purpose model, like GPT-3, that can be fine-tuned.

In short, it can be trained, with a supervised learning approach, on a much smaller dataset, which is human-labeled, and where humans show the general-purpose engine how to get better at specific tasks and be more truthful.

In the specific case of ChatGPT, it has been used a specific human-in-the-loop model, called InstructGPT, to smooth out some of the negative aspects related to GPT-3 to make ChatGPT viable as a conversational interface.

ChatGPT can often still be misleading, yet it can improve over time as it learns how to deal with more and more edge cases.

How does ChatGPT Make money?

ChatGPT launched as a free tool at the end of November 2022; it’s now getting monetized via a premium subscription model.

In short, ChatGPT follows a freemium model.

In addition, ChatGPT might also make money via API access, which might become critical to enable the transition of this tool from a breakthrough product to a business platform.

In the meantime, traffic to the OpenAI’s website, thanks to the massive growth of ChatGPT it has increased exponentially since November.

ChatGPT’s meteoric rise saw the app grow from almost 37 million global searches per month in December to over 83 million global searches in January. By February, it passed almost 154 million searches.

ChatGPT Premium (Plus/Turbo)

ChatGPT is available in a premium version called Plus, available at $20/mo, which comprises:

  • General access to ChatGPT, even during peak times
  • Faster response times
  • Priority access to new features and improvements


ChatGPT is now available also as API. As OpenAI explained, ChatGPT APIs use gpt-3.5-turbo, which is the same model used by ChatGPT product and it is priced at $0.002 per 1k tokens, which is 10x cheaper than the existing GPT-3.5 models.

Key Highlights

  • ChatGPT is a conversational AI interface created by OpenAI.
  • It combines the capabilities of large language models like GPT-3 and is fine-tuned with InstructGPT, a human-in-the-loop model, to increase truthfulness and reliability.
  • Large language models like GPT-3 are pre-trained on massive amounts of data using unsupervised learning to predict the next token in a text sequence.
  • After pre-training, fine-tuning is done with a smaller human-labeled dataset to improve the model’s performance on specific tasks.
  • ChatGPT is designed as a conversational interface, but it can still be misleading and improve over time as it learns from more edge cases.
  • To monetize ChatGPT, OpenAI follows a freemium model, offering a premium version called ChatGPT Plus starting at $20/mo.
  • The premium version includes faster response times, priority access to new features, and general access even during peak times.
  • API access is another revenue generation option, allowing developers to integrate ChatGPT into their applications at $0.002 per 1k tokens, 10x cheaper than existing GPT-3.5 models.
  • ChatGPT’s meteoric rise in popularity has driven significant traffic to OpenAI’s website since its launch.

Read Next: History of OpenAI, AI Business Models, AI Economy.

Connected Business Model Analyses

OpenAI Business Model

OpenAI has built the foundational layer of the AI industry. With large generative models like GPT-3 and DALL-E, OpenAI offers API access to businesses that want to develop applications on top of its foundational models while being able to plug these models into their products and customize these models with proprietary data and additional AI features. On the other hand, OpenAI also released ChatGPT, developing around a freemium model. Microsoft also commercializes opener products through its commercial partnership.


OpenAI and Microsoft partnered up from a commercial standpoint. The history of the partnership started in 2016 and consolidated in 2019, with Microsoft investing a billion dollars into the partnership. It’s now taking a leap forward, with Microsoft in talks to put $10 billion into this partnership. Microsoft, through OpenAI, is developing its Azure AI Supercomputer while enhancing its Azure Enterprise Platform and integrating OpenAI’s models into its business and consumer products (GitHub, Office, Bing).

Stability AI Business Model

Stability AI is the entity behind Stable Diffusion. Stability makes money from our AI products and from providing AI consulting services to businesses. Stability AI monetizes Stable Diffusion via DreamStudio’s APIs. While it also releases it open-source for anyone to download and use. Stability AI also makes money via enterprise services, where its core development team offers the chance to enterprise customers to service, scale, and customize Stable Diffusion or other large generative models to their needs.

Stability AI Ecosystem


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