006Who sets the price of a token?

The model

V4.1-Flash-1017 is a new version of the V4.1-Flash model DeepSeek released in September, with its weights posted under the MIT license, so anyone can host it. It is large, at 552B parameters plus 196B in a separate memory layer, but sparse: only 8B parameters are active when it reads and 16B when it writes, which is why it is cheap to serve. DeepSeek says it beats September’s version on all 11 benchmarks it reports and gives shorter answers. Its table shows it ahead of GPT-5.6 Sol on 9 of 10 benchmarks and of Claude Opus 5 on 4. Opus 5 still leads on the harder long-horizon tests, Terminal-Bench (51.8 against 42.3), NL2Repo (75.3 against 68.2) and ProgramBench (37.0 against 29.1), and on HLE (56.3 against 42.6). These are DeepSeek’s numbers, several from benchmarks few others report, run on its own agent harness. Independent evaluations aren’t out yet.

Priced like a budget model

US business hours fall in DeepSeek’s off-peak window, when it charges $0.15 per million input tokens and $0.60 per million output tokens. That is 27× less than GPT-5.6 Sol on input and 33× less on output, even at Sol’s discounted $4/$20, and 133× less on cached input. Cached input matters most for agents, which re-read the same context at every step. Against OpenAI’s cheapest model, GPT-5.6 Luna at $0.20/$1.20, it costs about the same. DeepSeek is selling a model it benchmarks against Sol and Opus at Luna’s price.

What earlier DeepSeek releases did

V2, in May 2024, started a price war in China: Alibaba cut a Qwen model 97%, Baidu made two Ernie models free and Zhipu cut 80%. US prices didn’t move. R1, in January 2025, roughly matched OpenAI’s o1 at $0.55/$2.19 against $15/$60, and Nvidia lost about $589B of market value on January 27. The biggest US cuts came over the following year. OpenAI released the cheaper o3-mini four days after the selloff and cut o3 by 80%, to $2/$8, in June. GPT-5 launched in August at $1.25/$10, and Anthropic took Opus from $15/$75 to $5/$25 in November. By mid-2025 the gap between DeepSeek and OpenAI’s flagship was the narrowest it has been.

2026 went the other way. GPT-5.5 launched the same week DeepSeek previewed V4, at $5/$30, double GPT-5.4. DeepSeek made a 75% cut to V4-Pro permanent in May, and US flagships didn’t follow. US labs cut later and selectively: OpenAI cut its cheapest model, Luna, by 80% in August and put Sol on a three-month discount, and Anthropic priced Opus 5.5 20% below Opus 5. None came near DeepSeek’s prices. DeepSeek itself raised prices in August and added peak-hour rates, a sign it couldn’t serve all the demand at its old prices.

The pattern

Each DeepSeek release resets the price of “good enough”. US labs answer by repricing the tier that competes and by temporary discounts, while holding flagship list prices around $4–5 for input and $20–30 for output. The price of a given level of capability falls very fast (Epoch AI measured 9× to 900× a year, depending on the benchmark), but the price of a top-tier token hasn’t. Two things limit DeepSeek’s direct pull: its own serving capacity, and the US companies and government users that won’t send data to a Chinese API. The pressure arrives through US companies hosting the open weights.

What this one might do

Mid-tier prices go first. If independent tests confirm Sol-level agentic scores at Luna-level prices, GPT-5.6 Terra ($2/$12) and Anthropic’s Sonnet-class models are the most exposed. Expect cuts and discounts there, and more bundling into subscriptions such as Codex and Claude Code, where per-token prices are harder to compare.

Cached input gets cheaper. It costs the labs little to serve, and most of what an agent reads is cached.

Flagship prices are the tell. Sol’s discount runs at least to November 21. Extending it or making it permanent would be the DeepSeek effect; going back to $5/$30 would mean OpenAI still has pricing power. Google’s plan to double Gemini Flash prices on January 1 is the same test.

DeepSeek is also going after agent developers. It now sells web search and page fetching to agents at $0.75 per 1,000 calls, free until November 1 when the calls come through Claude Code, Codex or DeepSeek’s own agent tool.

What it means for packs 004 and 005

OpenAI’s plan needs revenue to grow from $36B this year to $350B in 2030, and Anthropic’s IPO is being priced on $190–200B of revenue in 2028. Both assume usage grows much faster than prices fall. A model that caps mid-tier prices pushes more of that revenue onto the top tier, where DeepSeek still trails. Each 10% that OpenAI’s revenue falls short of plan adds about $84B to the $116B it still has to raise; try it below. For compute, cheaper tokens have so far meant more demand, not less: DeepSeek is rationing capacity with peak pricing, and V4’s launch barely moved US markets. The risk sits with the labs’ margins and the backlogs that depend on them, such as Oracle’s, Microsoft’s and CoreWeave’s, more than with the chipmakers.