The original title is "The LLM Cost Death Spiral (And How I Got Out of It)"

Short summary

LLM API costs scale linearly with usage, squeezing margins as products gain traction. Developers achieve 5-10x cost reduction through provider switching (OpenAI to DeepSeek), prompt caching, retrieval-augmented generation, model tiering, and output constraints. Compound architectural changes reduce daily costs from hundreds to tens of dollars.

• •API compatibility layers enable cheap provider swaps (DeepSeek) without rewriting application logic
• •Architectural optimization (tiering, caching, RAG, batching) compounds savings beyond simple migrations
• •Self-hosting viable only at high predictable usage; managed APIs suit variable workloads

Generated with AI, which can make mistakes.