Question 1

What is a token and how many tokens does a word have?

Accepted Answer

A token is the unit an AI model processes: usually between half a word and a full word. Rule of thumb: 1,000 tokens ≈ 750 English words. A 20-word sentence is about 26 tokens; a 300-word email is around 400. Models charge for input tokens (your prompt) and output tokens (their answer) separately.

Question 2

Why do cached tokens cost up to 90% less?

Accepted Answer

When your app sends the same system prompt on every request (e.g. "You are a customer support agent for Acme…"), providers store it once and reuse the computation. They only charge full price for the new part (the user's question). OpenAI, Anthropic and Google give 50% to 90% off cached tokens. The calculator above accounts for this via a cache-hit % slider.

Question 3

How much will I spend per month for N AI requests?

Accepted Answer

Open the calculator above, pick your use cases (emails, PDFs, chats…) or enter tokens manually, and you'll see cost per request, per day and per month in your chosen currency. For reference: a 1,000 requests/day chatbot on GPT-5.4 Mini costs ~$60/mo; on DeepSeek V3, ~$5/mo. The calculator also sums a combined total when you compare several models.

Question 4

Are there open-source models cheaper than GPT?

Accepted Answer

Yes. Llama 4 (Meta), DeepSeek V3, Qwen 3.5 and Mistral are open or open-weight and can be self-hosted. DeepSeek V3 on API costs about 1% of GPT-5.4 with comparable quality in many cases. If you handle sensitive data, an on-prem or VPC deployment with Llama 4 Maverick can beat any hosted API above a certain volume.

Question 5

How do I cut AI costs in my application?

Accepted Answer

Five levers: (1) cache system prompts (saves 50-90%), (2) batch API for non-urgent requests (50% off), (3) smaller model for simple tasks and flagship only when needed (complexity router), (4) trim prompts and cap output tokens, (5) fine-tune or use RAG instead of re-sending the same context every call. At Letbrand we audit each lever and typically cut costs by 40-80%.

Want to use AI in your project? Calculate, compare and choose the right one for you

Frequently asked questions about AI models and pricing

What is a token and how many tokens does a word have?

Why do cached tokens cost up to 90% less?

How much will I spend per month for N AI requests?

Are there open-source models cheaper than GPT?

How do I cut AI costs in my application?

Frequently asked questions about AI models and pricing

What is a token and how many tokens does a word have?

Why do cached tokens cost up to 90% less?

How much will I spend per month for N AI requests?

Are there open-source models cheaper than GPT?

How do I cut AI costs in my application?