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Part XI — Performance & Cost Optimization (Making It Fast and Affordable)/32. Token Economics for Builders
32. Token Economics for Builders
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The Cost Reality
LLM costs sneak up on you. What feels cheap in development becomes expensive at scale:
Development: 100 requests/day × $0.01 = $1/day ✓ Fine
Production: 100,000 requests/day × $0.01 = $1,000/day 😱Understanding token economics is essential for building sustainable AI products.
The Cost Equation
┌─────────────────────────────────────────────────────────────────┐
│ COST = TOKENS × PRICE │
├─────────────────────────────────────────────────────────────────┤
│ │
│ TOKENS │
│ ├─ Input tokens (your prompt + context) │
│ └─ Output tokens (model's response) │
│ │
│ PRICE (varies by model) │
│ ├─ Flash: $0.075 / 1M input, $0.30 / 1M output │
│ ├─ Pro: $1.25 / 1M input, $5.00 / 1M output │
│ └─ Output tokens cost MORE than input tokens │
│ │
│ OPTIMIZATION LEVERS │
│ ├─ Reduce input tokens (smaller context) │
│ ├─ Reduce output tokens (concise responses) │
│ ├─ Use cheaper models (Flash vs Pro) │
│ └─ Cache and batch (fewer API calls) │
│ │
└─────────────────────────────────────────────────────────────────┘Cost Levers
| Lever | Effort | Impact |
|---|---|---|
| Use Flash instead of Pro | Low | ~10x cheaper |
| Compress context | Medium | 2-5x cheaper |
| Cache responses | Medium | 10-100x cheaper |
| Batch requests | Low | 2-5x cheaper |
| Limit output tokens | Low | 1.5-3x cheaper |
Where to go next
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32. Token Economics for Builders sub-sections
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