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AI Token Prices Hit Record Low, Pressuring Model Developers' Margins
Technology Services · Internet Software/Services · yonhap_finance · 2026-09-02
AI token costs have plummeted to record lows, down 50% from May highs, benefiting users but raising profitability concerns for major AI model developers.
What Happened
Record Price Decline: The LLM Token Expenditure Index has dropped to 97 cents per million tokens, marking an all-time low. This represents a 50% decrease from the peak of $2.05 recorded in late May.
Drivers of the Downturn: The decline is attributed to the rise of open-source models like China's 'Kimi K3' and aggressive price cuts by industry leaders such as OpenAI. Furthermore, the adoption of dynamic pricing models has intensified competition among providers.
Impact on Developers: While lower token costs reduce expenses for end-users, they create significant revenue pressure for developers like OpenAI and Anthropic. Companies are facing a squeeze where compute costs remain high while revenue per token continues to shrink.
Strategic Pivot: Industry analysts suggest that foundation model companies must move beyond relying solely on performance benchmarks. Future success will likely depend on deepening integration, optimizing memory, and improving context handling to increase customer retention.