Traditional software has near-zero marginal costs: adding one more user costs almost nothing. Products based on language models break that assumption—every use costs real money.
What does this change?
- Unlimited plans can be risky: a small group of heavy users can eat up the profit margin for the entire customer base
- Free users are no longer truly free, so the “grow first, monetize later” strategy needs to be reevaluated
- Technical optimization has become a direct financial lever, not just a matter of speed
Four cost-reduction strategies, listed in order of effectiveness
1. Caching results. In many applications, a significant portion of queries are repetitive or nearly identical. Caching offers the greatest savings with the least effort.
2. Choose the right model size for each task. Classification and extraction do not require the most powerful model. Routing simple tasks to smaller models often cuts costs significantly without users noticing any difference.
3. Trim the context. Cramming the entire conversation history into each turn is the most common waste. Summarize the older parts and keep only the most recent ones verbatim.
4. Pad the reusable portion of the prompt. The beginning of the prompt is usually the same across call sessions; many providers charge a lower rate for this portion if it is marked as such.
Key Figures to Watch
Don’t just look at the total bill. Measure the cost per completed task and break it down. The median is usually very low; it’s the tail where the money goes—and the tail often stems from retry loops or contexts that balloon beyond expectations.
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