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The economics of LLM applications

ACAva ChenMay 8, 2026 7 min read

A great AI feature that loses money on every request is not a product — it's a liability. Unit economics deserve the same rigor as model quality.

Route intelligently

Not every request needs your most expensive model. Routing simple queries to smaller models and reserving frontier models for hard cases can cut costs by more than half.

Cache aggressively

Semantic caching and prompt caching eliminate redundant work. In high-traffic apps this is often the single biggest lever.

AC

Ava Chen

Principal AI Engineer · IdeioWorld