AI prices are plunging. That feels bad, but something else is happening.
Sam Altman, CEO of OpenAI.
Kevin Dietsch/Getty Images I can't believe I'm writing about Jevons Paradox.
This has become cliché in AI circles.
We're finally seeing real evidence that when AI prices plunge, usage and revenue rise.
The price of AI is falling fast.
That might sound like bad news for the industry.
Early evidence suggests the opposite is happening.
OpenAI recently slashed the price of its GPT-5.6 Luna model by 80%.
It also cut the price of its mid-range Terra model by 20%.
Then something striking happened: Customers started using dramatically more AI.
TD Cowen analysts studied usage data from OpenRouter , a service that lets developers access different AI models.
They found that the effective price of using Luna fell roughly tenfold after the cuts.
Meanwhile, consumption jumped about 14-fold.
Terra's effective price fell roughly threefold while usage increased about fivefold.
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