💰Model Cost Example (Optional)

Let’s do some simple math to see how choosing the right model affects your app’s costs.

You have 100 users. Each user generates about 50,000 tokens per day. That’s roughly 37,500 words or about 150-200 chat messages per user daily. Think of a busy customer support app or an active AI writing assistant.

We’ll calculate 30 days of usage and see what each model actually costs. The difference will shock you.

📊 Your App’s Usage Pattern

The Setup:

100 active users
50,000 tokens per user per day
5,000,000 total tokens daily
30 days = 150,000,000 tokens total

What 50,000 tokens looks like:

37,500 words (about 75 pages of text)
150-200 chat messages (typical back-and-forth conversation)
25-30 document summaries (500-word reports each)
50-75 code completions (medium-sized functions)

// Daily usage calculation
const users = 100;
const tokensPerUserPerDay = 50000;
const dailyTokens = users * tokensPerUserPerDay; // 5,000,000 tokens

// 30-day calculation
const totalTokens = dailyTokens * 30; // 150,000,000 tokens
const tokensInMillions = totalTokens / 1000000; // 150M tokens

💸 The Shocking Cost Comparison (Current Pricing)

Here’s what 150 million tokens (30 days) costs with each model:

Actual OpenAI Pricing per 1M tokens:

Model	Input Cost	Output Cost	Context Window
GPT-4o-mini	$0.15	$0.60	128K
GPT-4.1-nano	$0.10	$0.40	1M
GPT-4.1-mini	$0.40	$1.60	1M
GPT-4o	$2.50	$10.00	128K
GPT-4.1	$2.00	$8.00	1M
o4-mini	~$4.00	~$16.00	200K

Token Split (150M tokens total):

Input tokens (40%): 60M tokens
Output tokens (60%): 90M tokens

30-Day Total Costs:

Model	Input Cost	Output Cost	Total Cost	Cost Per User
GPT-4.1-nano	$6.00	$36.00	$42.00	$0.42
GPT-4o-mini	$9.00	$54.00	$63.00	$0.63
GPT-4.1-mini	$24.00	$144.00	$168.00	$1.68
o4-mini	$240.00	$1,440.00	$1,680.00	$16.80
GPT-4.1	$120.00	$720.00	$840.00	$8.40
GPT-4o	$150.00	$900.00	$1,050.00	$10.50

💰 Charging Users $5 vs $8 per Month

Scenario 1: $5/month subscription

const subscription5 = {
  monthlyRevenue: 100 * 5,        // $500 from 100 users
  costs: {
    "GPT-4.1-nano": 42.00,        // Profit: $458.00 (92% margin)
    "GPT-4o-mini": 63.00,         // Profit: $437.00 (87% margin)
    "GPT-4.1-mini": 168.00,       // Profit: $332.00 (66% margin)
    "GPT-4.1": 840.00,            // LOSS: -$340.00 (-68% margin)
    "GPT-4o": 1050.00,            // LOSS: -$550.00 (-110% margin)
    "o4-mini": 1680.00            // LOSS: -$1,180.00 (-236% margin)
  }
};

Scenario 2: $8/month subscription

const subscription8 = {
  monthlyRevenue: 100 * 8,        // $800 from 100 users
  costs: {
    "GPT-4.1-nano": 42.00,        // Profit: $758.00 (95% margin)
    "GPT-4o-mini": 63.00,         // Profit: $737.00 (92% margin)
    "GPT-4.1-mini": 168.00,       // Profit: $632.00 (79% margin)
    "GPT-4.1": 840.00,            // LOSS: -$40.00 (-5% margin)
    "GPT-4o": 1050.00,            // LOSS: -$250.00 (-31% margin)
    "o4-mini": 1680.00            // LOSS: -$880.00 (-110% margin)
  }
};

Key Insight: Even at $8/month, only the cheaper models are profitable. Premium models require $12+ pricing to break even.

⚠️ The Freemium Trap: Be Very Careful

Why Freemium Can Kill Your Business

const freemiumDanger = {
  freeUsers: {
    users: 10000,                 // 10K free users
    tokensPerMonth: 10000,        // 10K tokens each
    totalTokens: 100000000,       // 100M tokens total

    costs: {
      "GPT-4.1-nano": 280.00,     // $280/month for free users
      "GPT-4o-mini": 420.00,      // $420/month for free users
      "GPT-4.1-mini": 1120.00,    // $1,120/month for free users
      "GPT-4.1": 5600.00,         // $5,600/month - UNSUSTAINABLE
      "GPT-4o": 7000.00           // $7,000/month - BANKRUPTCY
    }
  },

  paidUsers: {
    users: 100,                   // Only 100 paid users
    subscription: 10,             // $10/month each
    revenue: 1000,                // $1,000/month revenue

    // With 10K free users costing $190-$4,750/month
    // You need massive paid conversion to survive
    breakEvenRatio: {
      "GPT-4.1-nano": "28:100",   // 28% conversion needed
      "GPT-4o-mini": "42:100",    // 42% conversion needed
      "GPT-4.1-mini": "112:100",  // 112% - IMPOSSIBLE
      "GPT-4.1": "560:100",       // 560% - IMPOSSIBLE
      "GPT-4o": "700:100"         // 700% - IMPOSSIBLE
    }
  }
};

Safe Freemium Strategy

const safeFreemium = {
  freeUsers: {
    users: 10000,
    tokensPerMonth: 1000,         // LIMIT: 1K tokens only
    totalTokens: 10000000,        // 10M tokens total
    model: "GPT-4.1-nano",
    cost: 28.00,                  // $28/month - manageable

    // What 1K tokens gets you:
    features: [
      "2-3 chat messages daily",
      "1 document summary",
      "Basic code completion"
    ]
  },

  paidUsers: {
    users: 200,                   // 2% conversion rate
    subscription: 15,             // $15/month
    tokensPerMonth: 100000,       // 100K tokens
    model: "GPT-4.1-mini",
    costPerUser: 11.20,           // $11.20 cost per user
    totalRevenue: 3000,           // $3,000/month
    totalCosts: 2268,             // $2,268/month ($28 + 200×$11.20)
    profit: 732,                  // $732/month (24% margin)

    profitMargin: "24%"           // Still healthy and sustainable
  }
};

📈 What Happens When You Scale?

1,000 Users (10x growth)

// Monthly costs with 1,000 users
const costs1000Users = {
  "GPT-4.1-nano": 420,           // $420/month
  "GPT-4o-mini": 630,            // $630/month
  "GPT-4.1-mini": 1680,          // $1,680/month
  "o4-mini": 16800,              // $16,800/month
  "GPT-4.1": 8400,               // $8,400/month
  "GPT-4o": 10500                // $10,500/month
};

// Revenue scenarios
const revenueScenarios = {
  "$5/month": {
    revenue: 5000,               // $5,000/month
    profitable: ["GPT-4.1-nano", "GPT-4o-mini", "GPT-4.1-mini"]
  },
  "$8/month": {
    revenue: 8000,               // $8,000/month
    profitable: ["GPT-4.1-nano", "GPT-4o-mini", "GPT-4.1-mini"]
  },
  "$12/month": {
    revenue: 12000,              // $12,000/month
    profitable: ["GPT-4.1-nano", "GPT-4o-mini", "GPT-4.1-mini", "GPT-4.1", "GPT-4o"]
  },
  "$20/month": {
    revenue: 20000,              // $20,000/month
    profitable: "ALL_MODELS"     // All models profitable
  }
};

🎯 The Bottom Line

The math is brutal:

Wrong model choice can cost 40x more ($42 vs $1,680/month)
Freemium with wrong limits can bankrupt you instantly
At $5/month pricing, only 3 models are profitable
At $8/month pricing, still only 3 models are profitable - need $12+ for premium models

Critical Freemium Rules:

Limit free tokens aggressively (1K-2K max per month)
Use only cheapest models for free users
Monitor conversion rates - need 15-30% to survive
Start with paid-only until you understand your costs

Smart Model Strategy:

Begin with GPT-4.1-nano for simple tasks (cheapest option)
Use GPT-4.1-mini for balanced performance and cost
Upgrade to GPT-4.1 only when quality is critical
Use o4-mini when you need reasoning capabilities

Remember: All models are per 1M tokens. Even small differences add up fast at scale.

The goal: Deliver great user experience at sustainable costs.

Choose wisely. Your bank account depends on it. 💰