OpenAI Cut Prices Threefold. Usage Jumped Fivefold. Jevons Would Be Smug.
OpenAI slashed model prices and watched consumption explode, a textbook demonstration of the Jevons Paradox. Terra's effective price fell roughly threefold while usage increased about fivefold. TD Cowen estimated that revenue from Luna rose about 34% compared with the seven-day period before the cut, because usage grew faster than prices fell.
The Jevons Paradox is the mechanism you should have learned in Econ 101. When a resource gets cheaper, total consumption rises enough to increase total spending, not decrease it. AI tokens are that resource now. If you are budgeting for AI tools, do not assume lower per-unit prices mean lower bills.
OpenAI, with Terra as the model and Luna as the revenue line analyzed by TD Cowen. Revenue from Luna rose about 34% in the week following the price cut.
- Open a free ChatGPT account and note how many messages you send in a typical day.
- Upgrade to the paid tier for one month and track your daily usage again.
- Compare your message volume before and after. Expect usage to more than double, confirming that cheaper access drives more consumption, not less.