“we pay like 1.5K because we actually offer uh five AI images for every free user so that scales pretty much”

Burn $1,500 Of LLM Spend On Free-Tier AI Images So Users Feel The Core Value Before Paying

Drop Magic gives every free user 5 AI-generated images as part of onboarding, which costs roughly $1,500/month in LLM bills. It's the biggest variable cost but lets users experience the core value before paying — and that activation cost still pencils out at 70-80% margins because conversion lifts on the back of the free demo.