OpenAI cuts prices on smaller models amid AI spending scrutiny

OpenAI just made its cheapest AI models a whole lot cheaper. The company announced on July 30 that it’s cutting prices on its smaller GPT-5.6 models, with the entry-level Luna seeing an 80% reduction and the mid-tier Terra dropping 20%. The timing is not subtle. Corporate America has been loudly questioning whether its AI spending is actually paying off, and a wave of lower-priced Chinese AI products has been eating into the market from below. The numbers behind the cuts The Luna model, OpenAI’s entry-level option in the GPT-5.6 family, saw the most dramatic reduction. Input costs dropped from $1 to $0.20 per million tokens. Output costs fell from $6 to $1.20 per million tokens. That’s an 80% haircut across the board. The mid-tier Terra model got a gentler trim. Input pricing moved from $2.50 to $2 per million tokens, while output costs decreased from $15 to $12 per million tokens. A 20% reduction. And then there’s the flagship Sol model, which stayed right where it was: $5 for input and $30 for output per million tokens. Why this matters beyond Silicon Valley This price cut didn’t happen in a vacuum. Just 11 days earlier, around July 19, OpenAI had already reduced GPT-4 Turbo API ...