Adam Sand warns that subsidized AI pricing won't last. A $200 monthly subscription currently covers roughly $4,000 in token usage, but costs will spike as companies shift from loss-leading to profit models, similar to Google Ads and Amazon. Converting PDFs to Markdown via pdftomarkdown.com cuts token consumption dramatically.
Google Ads used to cost 15 cents a click. Now it costs $75 a click. We are coming to the end of subsidized AI. And so if you don't figure it out now, it might be prohibitively expensive to figure it out. And then you're going to see permanent underclass and AI hegemony, or at least that's what the AI community thinks. Right now, AI is more or less accessible to anyone. Pretty much anybody in America can get a $200 a month AI plan. That $200 a month is technically you burning $4,000 a month. So when you pay Gemini $200 or Claude $200, you're really getting like $4,000 worth of tokens. A token equates to roughly a word. It's technically 3/4 of a word, but for just easy math, just call it a word. When you open up Gemini, you type it something, you give it 100 words, there's 100 tokens. Then it has to think about what you told it to do. So then it uses 10,000 tokens to think about what you told it, because it reasons through. And then response, which is maybe 1,000 words. So then it uses 1,000 tokens there. Then you send another message, it reads the 100 words plus the 10,000 tokens it burned thinking about it, plus 1,000 tokens that it spent responding, plus the 100 words you said back, and then it spends another 10,000 tokens thinking about it and gives you another 1,000 token response. And every model has a token window, so a million tokens. So the reason you like Gemini is because it's got a million token context window and it scores really high on reasoning. But when you give it a PDF, a PDF consumes 40 times as much tokens as Markdown. So if you want to get more context outta your context window, go to pdftomarkdown.com, a free tool, convert the PDF to Markdown. You'll spend 1/5 40th the tokens, like 2.5%. So you will get a lot more juice out of your token window. Just like Amazon ran at a loss for years, Airbnb ran at a loss for years, but then eventually it's like, hey, we built $10 billion worth of data centers, time to stop being Mr. Nice Guy. Google Ads used to cost 15 cents a click, now it costs $75 a click. Amazon became Amazon because when clicks were 15 cents, they were using the price differential. They understood the value there. They used the price differential financial to start Amazon Basics and started selling everything from USB cables to toilet paper because they just knew you went to Google and searched for a thing, and then you wanted to find out where you could buy a USB cable or an iPhone charger cable or printer paper or whatever. They just made it so that they always showed up, and then you always went to Amazon and bought it, and then you were hooked. And now you don't go to Google and search charging cable, you go to Amazon and search charging cable, and they became the grocery store of the planet. Well, that's going to happen with everything now.
