Cost vs Latency Tradeoffs

Tradeoffs

Part of: Streaming, Latency & Caching

Every technique in this module pulls on the same two dials: how fast the answer feels and how much it costs. A giant model gives the best answers but is slow and expensive. A tiny model is fast and cheap but weaker. Streaming, caching, and model choice are the levers you combine to find the sweet spot, and there is no single right setting, only the right setting for this request. What it is A cost vs latency tradeoff is the engineering decision of how to balance response speed, dollar cost, and answer quality, given that improving one usually worsens another. The three big dials: - Model tier. Bigger models are smarter but slower and pricier per token; smaller models are faster and cheaper but less capable. - Streaming. Makes a response feel faster (lower perceived latency) without changing cost. - Caching. Cuts both cost and latency for repeated or similar requests, but only when there is reuse to exploit. How it works You estimate the expected cost and latency of a strategy by weighting the cache-hit path against the cache-miss path. If a request hits the cache, it skips the model entirely: near-zero latency and near-zero cost. If it misses, you pay the full model latency and pri

Challenge: The Strategy Picker