AI API Token Cost Optimization: From $500 to $50 per Month with Next.js 16

I've seen an AI writing tool with fewer than 2,000 monthly active users burning $487/month on API costs. After systematic optimization, that dropped to $52—an 89% reduction—with no noticeable quality loss.

The 7 Token Black Holes

Bloated System Prompts — 500 tokens of "you are an expert..." fluff per request

Full Conversation History — passing the entire 10-turn dialog every time