AI Price War Heats Up as OpenAI Drops o3 Cost by 80%
Back in April, OpenAI launched o3 , its most advanced reasoning model at the time. The model quickly gained attention for delivering top-tier results across several major AI benchmarks like Codeforces, SWE-bench, and MMMU. It also came with a range of powerful tools, including web browsing capabilities and a built-in Python interpreter.
Despite its impressive performance, adoption of o3 was slower than expected. Many developers found it too expensive compared to other models on the market. For instance, Google’s Gemini 2.5 Pro offered similar capabilities at just a fraction of the cost — around 25% of what o3 was charging. Meanwhile, Anthropic’s Claude 3.7 series delivered even better coding results at a more competitive price point.
Now, OpenAI is making a move to win back developer interest. Starting today, the company has reduced the price of o3 by nearly 80% . Previously, the model was priced at $10 per million input tokens and $40 per million output tokens . The new pricing brings those down to just $2 per million input tokens and $8 per million output tokens — making o3 far more accessible and cost-effective for both individual developers and businesses.
Sam Altman, CEO of OpenAI, shared his excitement about the update on social media, writing:
“We dropped the price of o3 by 80%!! Excited to see what people will do with it now. Think you’ll also be happy with o3-pro pricing for the performance :)”
– Sam Altman (@sama), June 10, 2025
With this aggressive price cut, OpenAI is clearly aiming to regain ground in the fast-moving AI landscape and make o3 a more compelling choice for users who previously looked elsewhere due to cost concerns.