Clarifying our pricing

> I think we are starting to see the squeeze from the big players.

I’m not convinced that these price increases represent an attempt to squeeze more profit out of a saturated market.

To me they look an awful lot like people realising that the sheer compute cost associated with modern models makes the historical zero-marginal cost model of software impossible. API calls to LLM models have far more in common with making calls to EC2 or Lambda for compute, than they do a standard API calls for SaSS.

A lot of early LLM based business models seemed to assume that the historical near zero-marginal cost of delivery for software would somehow apply to hosted LLM models which clearly isn’t the case.

You mix that in with rising datacenter costs, driven by lack of available electricity infrastructure to meet their demands, plus everyone trying to grab as much LLM land as possible, which requires more datacenters, more faster. And the result is rapidly increasing base costs for compute. Which we’re now seeing reflected in LLM pricing.

For me the thing that stands out about LLMs, is that their compute costs are easily 100-10000x greater per API call than a traditional SaSS API call. That fact alone should be enough for people to realise that the historically bottomless VC money that normal funds this stuff, isn’t quite a bottomless as it needs to be to meaningfully subsidise consumer pricing.

It was obvious that they over raised. It's insane to raise that kinda money to go sell an open-source and otherwise free code editor that wraps an LLM that you don't own or host. So you're not providing the service, you don't have to code much of a product because you're front loaded 95% of the product with open source...you have no secret sauce... And you're going to raise that kinda money for what exactly? In hopes you can fool a bunch of people?

Do they think they're secret sauce is UX? There's better editors out there now too.

You want to know what the hype train of Cursor was for? It was marketing for LLMs.

What happened to wafer inference hardware like Cerebras? Why isn't Claude being served from that if it's so much faster and energy efficient?

What’s funny is even electricity (nuclear in particular) isn’t ’too cheap to meter’ as originally promised. It’s actually the most expensive.

> papers showing RL also hitting a wall

any reference for this?

Heh. Qwen3 still works on my machine.

I think LLM agents have completely broken the business model that companies like Cursor were founded on.

Early on Cursor added value by finding clever to integrate LLM into an IDE, which would allow single shot output of an LLM to produce something useful, and do so quickly. That required a fair bit of engineering to make happen reliably.

But LLM agents completely break that. The moment people realised that rather than trying to bend our tools to work within the limits of an LLM, we could instead just make LLM “self-prompt” their way to better outputs, Cursors model stopped being viable.

It’s another classic case of the AI “Bitter Lesson”[0] being learned. Throwing more data, and more compute at AI produces faster, better progress, than careful methodical engineering.

[0] http://www.incompleteideas.net/IncIdeas/BitterLesson.html

I’m interested if anyone here knows what exactly Cursor has built? My limited understanding is that they’ve done nothing but fork VS code and add a chat window and AI-integrated editing tools.

I saw an ad today OpenAI offering free AI interior design mock-up. Not sure if it a specific feature or just way to use image generation but either way they are commoditizing the thin wrappers.

They built nothing that someone else couldn't...and didn't. They got nothing.

This is also a bit of foreshadowing for all SaaS by the way.

Remember, nothing prevents anyone from simply vibe coding anything they see out there in the future. It turns the value of all software to near $0.

Cursor will go under. They'll be acquired for cheap (making more headlines, good press!), go bankrupt, or completely change their business into something else and undergo major restructuring. The point of Cursor is NOT to be a profitable ai code editor business. Look at the investors. Thrive dumped over $9B, using that $9B to advertise, market, and sell the product and services offered by the other companies they invest in -- the LLMs. At the end of the day, that's where the money flows.

In fact, none of the investors care one bit of Cursor survives. It's served its purpose. It was the "freebie" that people give out, the appetizer, for something bigger.

Cursor developed their own tab models IIRC

Well, rate limits take a moving window of time (say, one second) and check how many requests you make during that time, and throttle you, if necessary.

Cursor just makes that window one month long.

Technically, that's a rate limit.

But yeah, only technically.

Confusing pricing models generally don't tend to do well.

I think it’s fundamentally about context management and business model. Claude Code is expensive because it will happily put very large volumes into context because Anthropic are paid by the token. Cursor makes the bet that it can pay less per token whilst giving you enough value to still make margins on your $20 per month (assuming you’re using their default models).

This all becomes very clear when you do something that feels like magic in Claude Code and then run /cost and see you’ve blown through $10 in a single hour long session. Which is honestly worth it for me.

I’ve found cursor to be meaningfully faster, and tab autocomplete is really nice. It’s not like I can avoid touching code anyways, and when I do, cursor tab is near perfect at being a very smart auto complete. Claude is running through AWS bedrock though, so that could be the performance issue. But I do much prefer the terminal app for prompting

how many requests do you get per 5 hour window?

The Uber effect.

I seem to like cursor agent with sonnet. Or even copilot agent with sonnet. The editor integrated agent feels better.

For example they can react to in editor linter errors without running a lint command etc.

Dropped it long ago for Roo Code personally.

Auto complete isn’t an AI thing

Claude Code makes me feel like I'm dispatching a legit engineer to go get something done. But they come back in a minute instead of a week. Most of the time the solution gets the job done. Sometimes it introduces too much complexity, sometimes it's totally wrong, but it gets the job done. Cursor meanwhile just feels like shortening the (copy editor/paste chat/copy chat/paste editor) loop.

For $200/month you can get equivalent value to a team of engineers. Plan accordingly! The stack is no longer safe for employment. You need to move up to manager or move down to metal.

I noticed that as well so fixed it out of auto mode and onto the Claude 4 Sonnet 4. It takes longer but gives a better results.

I also saw that it was 0.8x the ‘credit cost’ thinking still that I had 500.

Now to learn that the 500 has gone and you get unlimited only on auto shows how easy it has been to misunderstand what they’re trying to say.

Also, I’ve no idea how to find out the cost of MAX. Especially as their web agent has the text MAX next to the selected non-max model.

It is. Tab is always included.

I was wondering who would catch that.

That's startups for you!

Maximum panic mode activated.

That's what Claude Pro will give you... now. As with Cursor there's no guarantee that it'll last. Next year, next month, next week, they may change their pricing when the competition runs dry.

Where exactly is the opt out?

Or any other open source solution. They're all going to be the same or better. Cursor is cooked. Trying to compete with open source lol. They should study the thing they're so dependent on - VS Code. A history lesson in how VS Code came to be would be good for them.