“That’s right folks. With the current subsidies, all it takes for a user to have a gross margin of at best negative 25% is for them to use as little as 25% of their rate limit.”
Our reading, the sentence that was checked:
Even assuming a 75% token gross margin, a subscriber using 25% of their rate limit yields at best a -25% gross margin.
Assessment: Supported Evidence as of
Where and when Ed Zitron wrote it
Where's Your Ed At, AI's Brokenomics, paragraph 84.
- Said
- Source observed
- live page, full text, public
- Evidence as of
- the cutoff for this assessment
- Assessment recorded
- assessment wyea-brokenomics-97b75f-a1
We recorded 41 claims from this post. See every claim from this post.
The wording above is the version this site observed on 2026-10-28. The source may have been edited after 2026-06-15. This page does not claim the wording was captured then.
What the claim commits to
- Kind
- Observation
- Deadline, as the speaker wrote it
- None stated. This site does not add one.
- Deadline state when assessed
- No horizon
- Deadline state on 2026-10-29
- No horizon (the release’s reference date)
Conditions
- assuming a 75% gross margin on tokens (qualifier, stated by the speaker)
From the speaker
- gross margin of at best negative 25%
- 25% of their rate limit
- 75% gross margin on their tokens
- current subsidies
Our interpretation
- This is a claim about the stated model's arithmetic, not a disclosure of actual company margins.
- A 75% API gross margin implies serving costs equal to 25% of API-price-equivalent consumption.
- At best means that the highest modeled subscription margin among the tested tiers is no greater than -25%.
- Utilization is assumed to scale API-equivalent consumption proportionally, with a constant workload mix.
- The target is the current month through publication, June 1–15, 2026.
Counts as supported if: Applying the assumed serving-cost ratio to 25% utilization produces margins of -25% or lower across the cited tiers.
Counts as contradicted if: Under the same model and inputs, at least one cited tier produces a margin above -25% at 25% utilization.
Retrospective: these criteria were written after the outcome was public.
Current assessment
Was it true for the period described?
Outcome: Supported
The dated evidence matches what the claim committed to, under the criteria frozen before grading.
Scored on a plain reading. The speaker named no measure for this claim, so it was judged on the reading an informed reader would take, stated below under our interpretation. Both reviews had to find that reading fair.
- Evidence as of
- Deadline state when assessed
- No horizon
- Assessment recorded
- Policy version
- 2026-10-28.7
Rationale
The arithmetic supports the claim under its stated assumption. At 25% utilization, modeled serving cost is 6.25% of the full API-equivalent allowance. The best margin among the six reproduced tiers is -25%; the other tiers are worse. This does not establish actual subscription margins or company-wide losses.
Limitations
- Depends on secondary reproduction of the original inputs.
- Assumes costs scale proportionally with utilization.
- The assumed 75% API margin is not verified as an actual company margin.
Evidence (1 item)
Supports the claim: Vlad's Playbook,
75%
Why it matters here: The reproduced inputs yield -25% for the two lower Anthropic tiers and lower margins for every other listed tier. This supports the arithmetic under the specified assumption, not actual profitability.
- Publisher
- Vlad's Playbook
- Kind of source
- Secondary summary
- Measures
- Anthropic and OpenAI, Modeled subscription gross margin at 25% utilization assuming 75% API gross margin percent of subscription revenue, estimate, 2026-06-01 to 2026-06-15
- Arithmetic
- For monthly price P and maximum API-equivalent usage V: margin = 100 × [P − u × V × (1 − g)] / P. Results in listed order: −25%, −25%, −150%, −118.75%, −118.75%, −337.5%. (inputs: Claude Pro: monthly price $20; maximum API-equivalent usage $400.; Claude Max 5x: monthly price $100; maximum API-equivalent usage $2,000.; Claude Max 20x: monthly price $200; maximum API-equivalent usage $8,000.; ChatGPT Plus: monthly price $20; maximum API-equivalent usage $700.; ChatGPT Pro 5x: monthly price $100; maximum API-equivalent usage $3,500.; ChatGPT Pro 20x: monthly price $200; maximum API-equivalent usage $14,000.; Utilization u = 0.25; assumed API gross margin g = 0.75.; Exact arithmetic on the source's rounded usage estimates; results shown to at most two decimal places.)
- Describes events of
- Public from
Where it was said (1)
Said once in the sources this register covers.
: Where's Your Ed At, AI's Brokenomics
That’s right folks. With the current subsidies, all it takes for a user to have a gross margin of at best negative 25% is for them to use as little as 25% of their rate limit.
- Where
- paragraph 84
- Published
- 2026-06-15
- Source observed
- , live page
- Access
- full text, public
History
Assessment versions
- Assessment wyea-brokenomics-97b75f-a1: Current. Outcome: Supported. Evidence as of 2026-10-28. Public date not recorded.
Recorded events
Assessment publishedBy this site
First assessment published after both reviews and the final-text check passed.