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Cost, Latency & Token Optimization Techniques

Core

Optimize cost, latency, and token usage while verifying against the eval · Difficulty 3/5

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cost-optimizationlatencyprompt-cachingbatchingmax-tokens

Explanation

Optimization is a tradeoff against measured quality -- never blind. There are five standard levers for reducing cost, latency, and token usage in a Claude system.

The Five Levers

  • **Prompt Caching** -- cut latency and cost on repeated stable prefixes with no accuracy loss (order stable content first, so the cacheable portion is contiguous)
  • Right-size the model -- route steps to the cheapest tier that still passes the eval; use Opus/extended thinking only where the task actually needs that capability
  • Trim the context -- prune stale tool output and over-fetched chunks; fewer tokens means lower cost and less context rot
  • Batch -- batch latency-tolerant bulk jobs to cut cost; the Batches API is async and cheaper, but it does not reduce per-request latency
  • **Cap `max_tokens`** -- bound output cost by setting an appropriate ceiling

Why These Five, and Not Others

Each lever targets a different cost driver: caching targets repeated input tokens, right-sizing targets per-token pricing, context trimming targets total input volume, batching targets throughput economics (not latency), and capping max_tokens targets output volume. Applying the wrong lever to the wrong driver -- e.g., expecting batching to speed up a single latency-sensitive request -- doesn't produce the expected saving.

Key Takeaways

  • Prompt caching cuts cost/latency on stable repeated prefixes with no accuracy loss -- order stable content first
  • Right-size the model: route each step to the cheapest tier that still passes the eval
  • Trimming context reduces both cost and context rot at the same time
  • The Batches API cuts cost for latency-tolerant bulk jobs but does not reduce per-request latency
  • Capping max_tokens bounds output cost

Glossary Terms

Related Concepts

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