Cheap or expensive is the wrong question

There are two arguments running side by side on the feed right now, and the people having them don’t realize they’re having the same one.

The first is about the Chinese models. DeepSeek will run you about $0.14 per million tokens of input and $0.28 on the output — somewhere between 35 and 100 times cheaper than a frontier Western model — and at that price the conclusion writes itself: it’s over, the bottom has fallen out, intelligence is basically free. The other end I can speak to personally, because I recently paid $160 for an hour of a frontier model on a genuinely hard problem. That’s the fully loaded rate of a $330K-a-year engineer. You can call it absurd, and depending on the day I’ll agree — except some days I mean absurdly expensive and some days absurdly cheap for what it actually did, and that whiplash is the whole story.

Both reactions are correct. $0.14 a million tokens and $160 an hour aren’t competing claims about whether AI is cheap or expensive; they’re two points on the same curve. The only honest answer to “is this cheap or expensive” is another question: for what you’re trying to do? When I paid for that hour I wasn’t overpaying and I wasn’t getting robbed — I had a problem that lived at that end of the frontier. On a different problem the same week I’d have reached for something 100x cheaper and been just as right.

The confusion comes from a mental model we haven’t let go of. People still think in terms of the prompt — you write it, you hit go, and either it works or the magic dies and you decide the whole thing was oversold. But the prompt was never the unit of work. The loop is. An agent, the way I’d define it now, is something with a goal, a loop, and an eval, and it grinds against that eval until the goal is met. Seen that way, the disappointment looks less like broken technology and more like a loop nobody bothered to give an eval or a second attempt.

The prompt was never the unit of work. The loop is.

Once work is loops instead of prompts, the loops vary in quality — and that’s where it becomes a market. For a fee you’ll rent whatever a loop needs: expertise dropped in, compute by the hour, a live link to the real world, a skill on demand — chosen on a blend of price and quality tuned to the job. Which is just the cost-quality frontier showing up one level down.

That’s the part we’re underrating. At any moment there’s a frontier of cost and quality, and different problems sit naturally at different points on it. Cleaning a spreadsheet doesn’t belong where designing a bridge belongs. Today we have a handful of crude dots; soon we’ll have hundreds, and the frontier itself marches outward the way it did for the semiconductor — the same dollar buys more next year than this year.

This is good news. Stop asking whether a model is cheap or expensive. Nothing is, in the abstract. It’s positioned — and the only question that matters is where on the frontier your problem belongs.