Building & Running AI beginner

Inference Cost

Also called: token cost

What it costs to run a model in production, billed per token in and per token out.

Input and output tokens are usually priced differently, with output the expensive side. Costs scale with conversation length because history is resent each turn, which is why naive chat apps get expensive fast. Caching, shorter context, and routing to smaller models are the standard levers.

In practice: Resending a 50-page document with every follow-up question, and paying for it every time.