What Makes Tokens Expensive?

What Makes Tokens Expensive?

2 pointsby mtokarski8 comments

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  • costs are in a large part tied to model parameter count, eg. a small model fits on one GPU, the biggest models require an entire rack

    the primary difference you see through those prices is model size

    that you don't seem much capability difference is why Big Ai is pushing for regulatory capture, because small models are nearly as good for many tasks at a fraction of the cost, undermining the business model they have used to justify the most expensive infra build out in human history

  • Willingness to pay. If people are willing to use Astra instead of Sol even if it costs twice as much, OpenAI has no need to make it cheaper. Prices only reflect costs in a competitive market where customers actively seek out cheaper alternatives.
  • From the user side, what cost me the most wasn't the price per token, it was how many I was sending. My app first sent one giant 120k character prompt on every call, whatever the task. Now each part of the app gets its own prompt and tools, and none is over 60k characters. Most of the trimming was by hand. Claude wasn't good at it for me, it over-prompted every time.

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