AI companies are currently dealing with token costs up to 175x more than what users pay. This is an insane and absolutely unsustainable subsidy. Some experts are already anticipating a new phase of the AI era called “The End of Subsidy” where AI companies will retire the “all you can eat” business model and establish metered credits as the new default. This is when VC firms will no longer cover the losses of the current failed business model. How far are we from that? Some estimate the end of the subsidy is less than one year away. If/when that happens, at the current rate of token usage, a startup will pay more for tokens than for a full team of senior software engineers. Time will tell.