Are LLM prices going up or down?

During a recent talk, I asked the audience: “Do you feel AI is becoming more expensive, or cheaper?” About two-thirds raised their hands for “more expensive”. The others said “cheaper”. So which is it?

In a way, both answers are correct.

AI certainly feels like it’s getting more expensive. Just look at the pricing of Anthropic models released in the past 10 months.

Anthropic model blended price ($ per million tokens)

(*) Models with increased token consumption caused by new tokenizer. Reflected in the chart by bumping price by 30%

If you always jump to the newest Anthropic model, your bill will mostly go up.

Anthropic clearly focuses on the more premium models. That makes sense: Flagship models bring in more revenue and the way to stay on top of major LLM benchmarks.

So here is answer number one: The price for flagship models is going up.

But there’s a huge selection of other models – and these tell a different story. In a recent study, the author identified a dramatic decrease in inference cost: a 600x drop in LLM token price from 2020 to 2026.

I loosely followed the method of that paper to plot the price trend myself – split by model tier (flagship, medium, and economy). The pattern: Flagship models remain relatively expensive. But in the two other tiers, LLM inference has become super affordable.

LLM inference cost per million tokens, 2022–2026 (log scale)

Just look at the numbers: Between flagship and economy models, we see a price difference of up to 100x.

So that’s answer number two: AI token prices overall are getting cheaper – especially if you look outside the frontier model zoo.

There’s a crucial third angle though: Enterprise AI spending is rising even while token prices fall (see data from Menlo, Kong and Boston Consulting Group).

Why is the overall AI spend growing? Simple: AI usage is going up faster than prices are falling. Teams implement more use cases. Patterns like long-running agents are particularly token-hungry.

Bottom line: Premium models remain expensive. My expectation: Flagship LLMs will become even more expensive in the near term, as models grow in size and subsidies slowly decrease across the industry. But competition continues to drive down prices in the mid-tier and economy segment. Pick a model aside from the flagships and costs drop dramatically.