Introduction
https://pg-blogs.netlify.app/posts/10-building-reliable-llm-apps-in-python/ closed with a section on picking the right model per task and caching a shared prefix. That was the entry point into a bigger discipline: LLM spend is an engineering variable, not a fixed bill — one you can measure and reduce with the same rigor you'd apply to query latency or memory footprint.
This post goes deeper on four levers: how input/output pricing actually works and why the prefix is usually where the money goes, the exact cache_control shape and how to prove a cache hit instead of assuming one, the Batches API for work that isn't latency-sensitive, and model routing — a cheap model triaging requests and escalating only the hard ones. The throughline is honest: measure before you optimize. Every lever here has its own cost; misapplied, it makes things slower or pricier, not cheaper.
Token Economics: Why the Prefix Is the Bill
LLM providers price input and output tokens separately, and output always costs more — generation is autoregressive (each token depends on every one before it), while input can be processed in parallel. Representative pricing from the current model catalog:
