DeepSeek Reveals Theoretical Margin on Its AI Models Is 545%
DeepSeek Reveals Theoretical Margin on Its AI Models Is 545%
3 comments
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As I understand it, profit is price minus costs. Profit margin is the percentage of the cost that is profit. So I don't see how they're getting more profit out than the total price? Are they counting extra value from selling or training on the prompt data?
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Yes, Profit is what’s left after you subtract costs from sales. DeepSeek claims it has a "theoretical profit margin of 545%." This means that for every dollar they spend, they could potentially make $5.45 in sales. However, this is a theoretical number, meaning it’s not what they actually earn. They mention that their real revenues are lower because they don’t charge for all their services and offer discounts.
It is interesting because so far the industry margin are opaque and there is no clear number from OpenAI/anthropic and co. So by sharing this info, it allows to have better visibility on the industry long term future.
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I think they mean profits are 545% of costs. Which would put revenue at 645% of costs.
Profit margin = (revenue - costs)/revenue = 545/645 = 84.5% profit margin.
So, yeah, headline is obtuse as hell and profit margins that high are either deliberately lies or grossly exploitative and uncompetitive.
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