OpenAI and Anthropic cut their LLM prices by up to 80% within a few months. Why?

OpenAI and Anthropic significantly reduced their LLM prices, by up to 80%, within a few months, largely due to competition from smaller open-weight models like DeepSeek V4 Flash 0420. The DeepSeek model, released in April 2026, offered a key competitive advantage with its low cache read price of $0.0028, making its effective cost much lower. This competitive pressure, along with the general trend of decreasing LLM prices, forced major providers to lower their rates to remain competitive.

This analysis uniquely attributes OpenAI's 80% GPT-5.6 Luna price cut to competition from smaller open-weight models like DeepSeek V4 Flash, unlike other reports focusing on general market trends.