The price of utilizing superior AI has fallen sharply.
Since late 2022, the worth of utilizing GPT-3.5-level AI fashions has dropped from $20.00 to only $0.07 per million tokens.
In accordance with Stanford HAI’s AI Index Report, that’s a 280-fold discount in lower than two years.
This large value drop is altering the pricing of AI advertising instruments. Instruments that solely large corporations might afford are actually inside attain for companies of all sizes.
AI Value Discount
The report reveals that enormous language mannequin (LLM) costs have fallen between 9 and 900 instances yearly, relying on the duty.
These value reductions change the ROI for AI in advertising. Instruments that had been too costly earlier than might now repay even for medium-sized corporations.
The hole between the perfect AI fashions is closing. The distinction between the primary and tenth-ranked fashions has shrunk from 11.9% to only 5.4% over the previous yr.
The report additionally reveals that AI fashions are getting smaller whereas staying highly effective. In 2022, to get 60% accuracy on the MMLU benchmark (a check of AI reasoning), you wanted fashions with 540 billion parameters.
By 2024, fashions 142 instances smaller might do the identical job. This implies companies can now use superior AI instruments with much less computing energy and decrease prices.
Chart: 2025 AI Index Report
Chart: 2025 AI Index ReportWhat This Means For Entrepreneurs
For entrepreneurs, these modifications convey a number of potential advantages:
1. Superior Content material Creation at Scale
The worth drop makes it reasonably priced to create and optimize content material in bulk. Duties can now be automated cheaply with out shedding high quality.
2. Higher Evaluation
Newer AI fashions can course of as much as 1-2 million tokens (items of textual content) directly. This is sufficient to analyze complete web sites for aggressive insights.
3. Smarter Data Administration
Retrieval-augmented era (RAG), the place AI pulls data out of your firm’s knowledge, is enhancing. This helps entrepreneurs construct techniques that guarantee AI outputs match their model voice and experience.
The Finish of AI Moats?
The report reveals that AI fashions have gotten extra comparable in efficiency, with little distinction between main techniques.
This means that the sting in advertising know-how could shift from the uncooked AI energy to how properly you employ it, your technique, and your integration expertise.
As AI capabilities change into extra widespread, the true difference-maker for advertising groups will likely be how successfully they use these instruments to create distinctive worth for his or her corporations.
For extra on the state of AI, see the complete report.
