One of the assumptions guiding the analysis here is that sticker prices will approach marginal costs in a competitive market. DeepSeek recently released data about their production inference cluster (or at least one of them). If you believe their numbers, they report theoretical (assuming no discounts and assuming use of the more expensive model) daily revenue of $562,027, with a cost profit margin of 545%. DeepSeek is one of, if not the, lowest price providers for the DeepSeek-R1 and DeepSeek-V3 models. So this data indicates that even the relatively cheap providers could be making substantial profits, providing evidence against the minimum priced provider being near marginal cost.
One of the assumptions guiding the analysis here is that sticker prices will approach marginal costs in a competitive market. DeepSeek recently released data about their production inference cluster (or at least one of them). If you believe their numbers, they report theoretical (assuming no discounts and assuming use of the more expensive model) daily revenue of $562,027, with a cost profit margin of 545%. DeepSeek is one of, if not the, lowest price providers for the DeepSeek-R1 and DeepSeek-V3 models. So this data indicates that even the relatively cheap providers could be making substantial profits, providing evidence against the minimum priced provider being near marginal cost.