Cheaper AI Tokens Are Actually Costing Companies More, Not Less

Here's a counterintuitive one: as LLM token prices have dropped dramatically over the past two years, total AI spending at many companies has gone up, not down. Northwood Systems laid out the dynamic in a recent blog post, pointing to the Jevons paradox — the 19th-century economic observation that cheaper resources tend to get consumed in larger quantities, wiping out the savings.

