# Open-model pricing depends on more than free weights

Markdown copy of https://realalpha.app/s/open-model-pricing-depends-on-more-than-free-weights/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Thomas Wolf](https://realalpha.app/builders/thomas-wolf/) · Thomas Wolf is cofounder and Chief Science Officer of Hugging Face.
- Host: [Matt Turck](https://realalpha.app/people/matt-turck/) · General Partner, FirstMark Capital · Publishes the annual MAD landscape of data and AI; sold TripleHop to Oracle.
- Show: The MAD Podcast
- Episode: [“OpenAI’s Model Hacked Us” - Hugging Face’s Thomas Wolf](https://realalpha.app/v/FU9A481E2W8/), Aug 7, 2026
- Moment: 36:56 to 39:42 of the episode (3 min), playing on https://realalpha.app/s/open-model-pricing-depends-on-more-than-free-weights/; the episode from there: https://realalpha.app/v/FU9A481E2W8/?t=2216

## Quote

> “You have quite a **wide ecosystem**, like the entry barrier to be a cloud provider is pretty low.”
> — [Thomas Wolf](https://realalpha.app/builders/thomas-wolf/) at [37:43](https://realalpha.app/v/FU9A481E2W8/?t=2263) · The MAD Podcast

## Takeaways

1. Provider competition can lower inference costs per token.
2. Rent, chip prices and quantization shape serving economics.
3. Closed-model subscriptions may cost less than the underlying service.

## About this segment

Open weights bring competing inference providers, while data-center rent, chip costs and quantization shape token prices. Closed-model subscriptions may also be subsidized, so today's prices may not last.

From ““OpenAI’s Model Hacked Us” - Hugging Face’s Thomas Wolf”, Aug 7, 2026. [Watch the full episode](https://realalpha.app/v/FU9A481E2W8/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[37:01](https://realalpha.app/v/FU9A481E2W8/?t=2221) On the first point on the sort of enterprise adoption of open source AI, there was a moment in time when people associated open source to free. But I think the world has quickly learned that while the models may be free to download deploying them and serving them is certainly not free what is your sense of the cost advantage of open source in reality in the enterprise yeah that's a that's a very good note and it's the same very very stupid mapping open source equal free cost is also wrong there and it's much more subtle and like do you have an advantage or not i think the nice thing about open source is you You have quite a wide ecosystem, like the entry barrier to be a cloud provider is pretty low.

[37:54](https://realalpha.app/v/FU9A481E2W8/?t=2274) So you have a lot of competition there on what's going to be the cost per token. And this is a mix of many things, right? How cheap are you renting your data center? How cheap can you buy your chips? And here, actually, we have also a new chips company who are going to come on the market. And this is going to be very interesting to watch. And so basically how cheap is your hardware and then how much you can optimize the model.

[38:19](https://realalpha.app/v/FU9A481E2W8/?t=2299) Can you quantize them? So for instance, the model we use to counter OpenAI intrusion was GNM 5.2 that was quantized by NVIDIA in four bits. And this is to make it faster and smaller to run. So you have a lot of like strategy you can use and explore to make this model cheaper. But it's also true that they don't have to be cheap per se. and also that the closed source model may be in a way subsidized right now.

[38:47](https://realalpha.app/v/FU9A481E2W8/?t=2327) Like the amount, the number of token you get for your $20 chat GPT or cloud subscription might not be the full price that they actually pay for your token. So there is this kind of complex balance around costs while maybe your cloud like inference provider for open source model doesn't have so much leverage that you can lose money on kind of a subscription. business so we have something more complex um i think ultimately all subsidized by venture capitalists exactly we have the same like thing we've seen in many fields right but we also know this is ultimately a little bit temporary so you should not fully rely on that this is not the equilibrium price of the markets yeah sort of the uber phenomenon right like cheap ubers before the ipo and expensive ubers since i think you want to keep the ecosystem alive for the past uh vc