Cost (Tokens & Pricing)

AI usage is priced by the token — you pay for what goes in (your prompt plus all context) and what comes out (the response). Different models have very different price points, sometimes by orders of magnitude. At small scale this rarely matters; at production scale, with thousands of requests per day, cost becomes a serious architectural consideration that shapes which models you use and how you design prompts.

Videos explaining this concept

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Notes on AI

Tokens

AI models do not read words. They read tokens — the basic unit of text a model processes. A token is close to a word but not the same: one word can be one token, several tokens, or several words ca...

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Notes on AI

Tokenization

Tokenization is the process of turning raw text into tokens before an AI model processes it. It is preprocessing, not thinking — the model only sees the resulting pieces.