MUMBAI: The era of bargain AI may be coming to an end. DeepSeek, the Chinese startup that disrupted the artificial intelligence market with ultra-low pricing, plans to significantly increase the cost of its AI services as it shifts its focus towards a more sustainable business model.
According to a Bloomberg report, the company posted a notice on Thursday informing customers that it would introduce “substantial” price increases across its AI services, although it did not disclose the revised rates or a timeline for the changes. Users were advised to plan ahead before the new pricing takes effect.
DeepSeek currently charges US$0.14 per million input tokens and US$0.28 per million output tokens for its V4 Flash model. Bloomberg noted that these rates remain far below those of competitors. Chinese rival Moonshot AI charges US$3 and US$15 per million tokens for Kimi K3, while Anthropic prices its Claude Fable 5 service at US$10 and US$50 per million tokens.
DeepSeek’s aggressive pricing strategy sparked a global debate over the economics of high-performance AI models and gave rise to the idea of a “DeepSeek death zone”, where costlier or less capable AI offerings could struggle to compete. The pricing pressure also fuelled questions about the long-term profitability and public listing ambitions of rivals including OpenAI and Anthropic.
Bloomberg said the planned price increase could mark a turning point for China’s AI industry, where many companies have mirrored DeepSeek’s low-cost, open-source approach. Investors and startups have increasingly sought ways to move beyond heavily subsidised AI services towards commercially viable businesses.
The report also said DeepSeek is in the middle of a major fundraising round and has begun preparations for an initial public offering that could take place as early as this year. That would require founder Liang Wenfeng to balance investor expectations with the high capital requirements of expanding AI infrastructure.
Bloomberg further reported that DeepSeek plans to build a large data centre in Inner Mongolia as part of an effort to secure one gigawatt of AI computing capacity, including leasing additional infrastructure from third parties.
Highlighting the scale of such investments, Nvidia, chief executive officer, Jensen Huang has previously estimated that a one-gigawatt AI data centre equipped with cutting-edge AI accelerators could cost around US$50 billion, although Bloomberg noted that construction costs in China are generally lower than in the United States.
Any price increases would primarily affect developers and businesses that purchase AI services directly from DeepSeek. However, because the company’s V4 Flash model is released under a permissive open-source licence, other providers can continue hosting the model independently, giving customers alternative options if DeepSeek’s prices rise too sharply.
The move suggests that after reshaping the AI market through aggressive pricing, DeepSeek is now prioritising profitability, a shift that could influence pricing strategies across the global AI industry.
