LLMs on sale: What happens when OpenAI, Anthropic offer Feds value meal pricing?
The US government is getting good at squeezing technology vendors and foundational model players OpenAI and Anthropic are raising to give away ChatGPT and Claude to the Feds for $1 a year.
It’s quite possible that the race to near-zero for LLM pricing isn’t going to stop with the General Services Administration (GSA) as scale enterprises follow suit.
Anthropic said it will offer Claude for Enterprise and Claude for Government to all branches of the US government for $1 per year. The deal is available for a year. OpenAI’s offer is OpenAI for Government for $1 per agency for the next year.
The deals make sense from a land-expand-perspective, but I can already write the headline when the $1 offers expire. The headlines will go like this: “OpenAI and Anthropic gouge USâ€. Now maybe none of these deals matter since OpenAI and Anthropic are already in a nice Department of Defense contract.
Headline risk and the race to scale adoption at any cost are the two primary reasons OpenAI and Anthropic are going the value-meal route for LLMs. That headline risk is also giving GSA leverage. In 2025, the GSA announced agreements with AWS, DocuSign, Oracle, Elastic, Salesforce, Adobe, Google and Microsoft. According to the Congressional Budget Office, the US government employees 2.25 million military personnel and 2.25 million civilian workers.
Now what is the risk? Large enterprises may want better pricing too. We already know that LLMs are reaching the good enough stage.
If I’m Walmart, the deals OpenAI and Anthropic gave the US government would have me prepping the “lower the price or else†emails. Walmart has the most workers at 2.1 million followed by Amazon at 1.56 million, according to CompaniesMarketCap. We assume Amazon will optimize LLM costs with Amazon Bedrock and its own Nova models. Walmart could squeeze its LLM providers (and tech vendors in general) just as it does suppliers.
We’ll assume that BYD and Foxconn, two companies with an employee base approaching 1 million, will go with Alibaba’s Qwen or DeepSeek.
Add it up and it’s not a reach to see LLM price pressure accelerating. With value-LLM deals, open-source models and private label models like Amazon Nova commoditization is just going to accelerate.
About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology. Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and…...
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