Most people experience the power of AI through ChatGPT's website, chat.openai.com, paying a monthly subscription for access. But there's another, often more cost-effective, way to tap into OpenAI's models: their API. In this post, we'll explore what the OpenAI API offers, how it differs from the standard ChatGPT subscription, and crucially, how you can figure out which option is cheaper for you. We'll dive into the token-based pricing system and introduce a free tool, GPTWise, to help you calculate your actual token usage and estimate costs based on your chat history.

Your Access Options: ChatGPT Website vs. OpenAI API

ChatGPT Website (The Familiar Choice)

• Cost: Monthly subscription ($20 for ChatGPT Plus)
• Access: Through chat.openai.com
• Models: Unlimited use of GPT-3.5 and GPT-4o-mini, with limited access to GPT-4 (subject to availability and usage caps).

OpenAI's API (The Flexible Alternative)

• Cost: Pay-as-you-go based on token usage.
• Access: Integrate into your own applications or use third-party tools.
• Features: No waiting times, flexible model selection, and enhanced privacy controls.

Demystifying Tokens: The Building Blocks of AI Costs

Before we can tackle the pricing puzzle, it's crucial to understand the fundamental unit of measurement in the world of OpenAI: the token.

What Exactly is a Token?

Think of a token as a piece of text that the AI models read and process. It's not exactly a word, but it's closely related. A useful approximation is:

Roughly 1 token ≈ 0.75 words

Therefore, 100 tokens ≈ 75 words

Calculating Tokens: Estimation vs. Precision

There are two ways to figure out how many tokens you're using:

Approximate Method: A quick-and-dirty way is to divide the number of words by 0.75. Example: A 150-word paragraph is estimated to be around 200 tokens.

Precise Method: For accurate token counts, use OpenAI's official Tokenizer tool. This is essential for precise cost calculations.

Decoding OpenAI's API Pricing: Pay-Per-Token Explained

With the OpenAI API, you're charged based on the number of tokens you use, with separate rates for the text you send (input) and the responses you receive (output).

Current Pricing (As of October 2023): Focusing on GPT-4o

GPT-4o represents OpenAI's cutting-edge, multimodal model. It's faster, cheaper, and more versatile than its predecessor, GPT-4 Turbo, boasting enhanced vision capabilities, a massive 128K context window, and a knowledge cutoff of October 2023.

Model: gpt-4o

Pricing

• Input: $2.50 per 1 million tokens
• Output: $10.00 per 1 million tokens

Batch API Pricing (for large-scale processing)

• Input: $1.25 per 1 million tokens
• Cached Input Tokens: $1.25 per 1 million tokens
• Output: $5.00 per 1 million tokens

Illustrative API Cost Calculation: A Real-World Example

Let's break down the costs using the gpt-4o model and the current pricing.

Scenario: A technical conversation

• Input Tokens: 1,000 tokens
• Output Tokens: 2,000 tokens
• Model Used: gpt-4o

Calculations

Input Cost

• 1,000 tokens input
• Pricing: $2.50 per 1 million tokens
• Cost: (1,000 / 1,000,000) * $2.50 = $0.0025

Output Cost

• 2,000 tokens output
• Pricing: $10.00 per 1 million tokens
• Cost: (2,000 / 1,000,000) * $10.00 = $0.02

Total Cost per Conversation

• $0.0025 (input) + $0.02 (output) = $0.0225

Scaling Up

• 20 similar conversations per day:
• Daily Cost: 20 * $0.0225 = $0.45
• Monthly Cost (approx. 30 days): $0.45 * 30 = $13.50
• Comparison: This is significantly less than the $20/month ChatGPT Plus subscription.

The Crucial Question: API or Subscription --- Which Reigns Supreme in Cost-Effectiveness?

Determining the cheaper option requires a detailed understanding of your usage patterns. Traditionally, this involves a tedious process:

1. Visit OpenAI's Tokenizer
2. copy-paste each conversation
3. Painstakingly count tokens
4. Cross-reference with OpenAI's pricing
5. Perform cost calculations
6. Finally, compare with the subscription cost

With API pricing, costs directly correlate with your precise token consumption. In contrast, the ChatGPT Plus subscription, while offering seemingly unlimited usage, has usage caps on more powerful models like GPT-4, potentially leading to frustrating wait times.

Checking Your Actual Token Usage with GPTWise

To check your actual token usage, you can use gptwise.app, a free tool designed to estimate token usage and costs directly from your exported ChatGPT conversations. Here's how it works in a nutshell:

1. Export your ChatGPT conversation history (usually as a JSON file)
2. Upload the file to GPTWise
3. Receive an instant analysis of token usage and estimated costs

Example Analysis: A Glimpse of GPTWise in Action

Here's a sample output from a typical conversation analysis:

{\
"conversation": "How do I implement a binary search tree?",\
"input_tokens": 8,\
"output_tokens": 312,\
"model": "gpt-4o",\
"api_cost_input": "$0.00002",\
"api_cost_output": "$0.00312",\
"total_api_cost": "$0.00314",\
"subscription_equivalent": "0.016% of monthly limit"\
}

Calculations (Demonstrated Again)

• Input Cost: (8 / 1,000,000) * $2.50 = $0.00002
• Output Cost: (312 / 1,000,000) * $10.00 = $0.00312
• Total Cost: $0.00314

This illustrates that short questions eliciting extensive answers often prove more economical with the API. Conversely, sustained, heavy daily usage might still favor the predictability of the subscription model.

Important Note: GPTWise provides an estimation based on the text of your conversations. It's most accurate when your interactions are primarily text-based. If this aligns with your typical ChatGPT usage, GPTWise can be invaluable in deciding whether the API is a cost-effective alternative.

Extending the API Option: How It Can Be an Alternative to ChatGPT

The OpenAI API allows you to access AI models programmatically. Instead of interacting through the ChatGPT website, you can use the API to integrate AI capabilities directly into your own applications or use third-party tools.

Ways to Use the API as an Alternative to ChatGPT

1. OpenAI Playground

Access It Here: OpenAI Playground

OpenAI Playground Interface

The OpenAI Playground is a web-based interface that lets you experiment with the API without writing any code.

Features

• Test different models (including GPT-4o)
• Adjust settings like temperature, max tokens, and more
• Save and load prompts for future use

Benefits

• No coding required
• Immediate access to API features
• Great for experimenting with prompts and settings

Considerations

• Not as feature-rich as dedicated chat applications
• Manual interaction without the conversational context of ChatGPT

2. Use Open-Source Chat Apps

ChatGPT is a great way to use OpenAI models, but there are other powerful models out there. For now, let's focus on OpenAI. Open-source chat apps like Open WebUI have many features and options. You can integrate external APIs, build a prompt library, fine-tune models, or build your custom plugin.

Examples of Open-Source Chat Tools

• Open WebUI

Open WebUI Interface

• Jan

Jan Interface

These tools offer interfaces similar to ChatGPT but with additional features and customization options.

Features

• Enhanced UI/UX with more options and plugins
• Ability to install plugins for specific tasks (e.g., code debugging, data analysis)
• Support for multiple AI models and versions

Benefits

• More Control: Customize the interface to suit your needs
• Privacy: Data used through the API is not utilized to train OpenAI's models
• Cost-Effective: Pay only for the tokens you use

Considerations

• May require some technical setup
• Plugins and tools vary in quality and support

3. Other Tools and Integrations

There are many other tools and platforms that utilize the OpenAI API to provide enhanced AI experiences.

Examples

• Chatbot Platforms: Integrate GPT models into Slack, Discord, or other messaging apps
• Productivity Tools: Use AI for summarization, translation, or content generation within your workflows
• Developer Tools: Incorporate AI assistance directly into code editors like VSCode

Why Consider the API Option?

• Flexibility: Tailor the AI experience to your specific needs
• Advanced Features: Access settings and parameters not available in the standard ChatGPT interface
• Privacy: Data sent through the API is not stored or used to train models
• Scalability: Ideal for integrating AI into applications that serve multiple users

Is the API Option Right for You?

While the API offers many advantages, it's essential to consider your usage patterns.

• Low to Moderate Usage: If you don't use ChatGPT extensively, the API might be more cost-effective
• High Usage: Heavy users might find the subscription model cheaper
• Need for Customization: If you need features beyond what's offered in ChatGPT Plus
• Data Privacy Concerns: The API provides more control over your data

When the API Might Be Cheaper

• Infrequent Use: Occasional queries or short interactions
• Specific Tasks: Using the AI for brief, targeted tasks
• Cost Control: Paying only for what you use without a monthly commitment

When ChatGPT Plus Might Be Cheaper

• Heavy Daily Use: Frequent, long conversations
• Consistent Workflows: Regular reliance on AI assistance
• Convenience: Immediate access without worrying about token counts

Wrap-Up
Choosing between the ChatGPT subscription and the API option depends on your individual needs and usage patterns. By understanding the costs, benefits, and features of each, you can make an informed decision that best suits your requirements.