Google slashes Gemini 2.5 Pro prices, intensifying AI model pricing war

Google’s aggressive pricing strategy for its new Gemini 2.5 Pro model represents a significant escalation in the AI pricing wars, challenging competitors like Anthropic and OpenAI with substantially lower rates. The move comes after Google observed strong developer interest following the model’s quiet launch, prompting the company to not only increase rate limits but also position its “most intelligent model ever” at a price point that has surprised industry observers and potentially disrupted the reasoning model market.

The big picture: Google has moved Gemini 2.5 Pro into public preview with remarkably competitive pricing that undercuts major competitors.

• At $1.24 per million input tokens and $10 per million output tokens, Google’s pricing significantly undercuts comparable offerings from Anthropic and OpenAI.
• The experimental version of the model will remain free but with lower rate limits, while the public preview version will feature higher rate limits and billing.

By the numbers: Google’s pricing strategy creates substantial cost advantages against key competitors in the reasoning model space.

• Anthropic’s Claude 3.7 Sonnet costs $3 per million input tokens and $15 for output tokens – more than double Google’s input pricing.
• OpenAI’s flagship reasoning model, o1, is priced at $15 per million input tokens and $60 per million output tokens – roughly 12 times more expensive for input processing than Gemini 2.5 Pro.
• Even OpenAI’s smaller o3-mini model costs $1.10 per million input tokens and $4.40 per million output tokens, making it cheaper but less capable than Google’s offering.

Industry reactions: The pricing strategy has generated surprise within developer communities, with social media users noting that the AI market is “about to get wild.”

• VentureBeat’s Ben Dickson tested Gemini 2.5 Pro and declared it may be the “most useful reasoning model yet,” indicating the lower pricing doesn’t reflect compromised capability.

Why this matters: Affordable pricing for high-capability reasoning models is emerging as the next major competitive battleground in AI development.

• Chinese AI company DeepSeek previously disrupted the market with unexpectedly low pricing for its DeepSeek R1 model, putting pressure on established players.
• Google’s aggressive move suggests major AI developers are increasingly willing to sacrifice short-term margins to capture developer mindshare and market position.

What they’re saying: Google highlighted the enthusiastic response from developers in their announcement.

• “We’ve seen incredible developer enthusiasm and early adoption of Gemini 2.5 Pro, and we’ve been listening to your feedback,” Google stated in their blog post.