May 27, 2025 by Vincent Schmalbach
For the first time, it's not the AI's capabilities that limit me. It's what I can afford to spend.
I use AI for most of my development work, mainly through Cursor IDE, and I've always used the best available models regardless of price. The productivity boost made the costs worth it. But with the newest models, this is changing.
What These Models Actually Cost
OpenAI's o3 and Claude Opus 4 are genuinely impressive, but their pricing is steep. A single API call to Claude Opus 4 can cost $2 or more, and o3 is similarly expensive. These models are great for complex debugging or planning system architecture, but they're getting too expensive for everyday use.
Agentic Tools Make It Worse
The real issue comes with agentic coding tools. When you give Cursor a task in agent mode, you can't control how many API calls it makes. One prompt might trigger 10-20 separate calls as the AI works through the problem. Add maximum context windows (which give better results), and a single task can easily cost $20-40.
If you're doing multiple AI-assisted tasks throughout the day, you can easily rack up hundreds of dollars in API costs. Even if you're billing $100/hour, an AI tool that costs you hundreds per day just doesn't make economic sense.
Who Gets Left Behind
This creates obvious divisions. Developers with higher rates can still afford these tools but now have to think twice about when to use them. Amateur programmers and developers in lower-income areas might afford Cursor's $20/month subscription, but they can't access the best models since those are only available in the expensive max mode.
The Real Problem
We now have AI that can solve complex coding problems, but most developers can't afford to use it regularly. The technology is there, but the economics don't work for many people.
For lots of developers, the question has changed from "can this AI solve my problem?" to "can I afford to find out?" This hits junior developers and people building their skills the hardest. They could benefit most from AI help but can least afford premium access.
Subscribe to my Newsletter
Get the latest updates delivered straight to your inbox
I respect your privacy. Unsubscribe at any time.