Five frontier models now sit within five points of each other in terms of intelligence, but their cost per unit differs by 3.8x.
Google’s Argon prices at the bottom of the cluster at $1.99 a task1, 74% below the most expensive model, Fable 5.1. It is also 67% below Opus 5.5, 56% below Muse Wonder & 39% below Astra.
Jeff Bezos famously said, “Your margin is my opportunity.”1 Does this maxim apply in software & AI? Yes.
Software companies maintain 76% gross margins yet earn almost nothing. Sales, marketing, & research & development consume it all.
Among 69 publicly traded B2B software companies, the median net income margin hovers near zero.2 Gross margins cluster tightly around 76%, yet almost none of that profit flows to the bottom line.