Cheap AI Models Just Got Expensive

YPO Technology Network AI Brief · Aug 5, 2026 · 7m

For two years, which AI model to route a workload through was an engineering call made on cost and quality. This week both inputs went to extremes at once. DeepSeek cut its V4-Flash pricing 50 percent on Saturday, one day after OpenAI cut its own prices by up to 80 percent, and according to independent benchmarking the same test suite now costs roughly 3 cents on DeepSeek's cheapest model against about 1.86 US dollars on OpenAI's and 3.15 on Anthropic's top model: a spread of two orders of magnitude, in a race Beijing is openly subsidizing even while warning its own firms about it. Then…