AI Cost Calculator
What Does AI Actually Cost Per Month?
Understanding AI API Pricing
AI APIs charge based on tokens — the basic units that language models process. One token is roughly ¾ of a word, so 1,000 words ≈ 1,333 tokens. Every API call has two token costs: input tokens (your prompt and context) and output tokens (the AI's response).
Output tokens typically cost 2-5x more than input tokens because generating text requires more computation than reading it. This means a chatbot that writes long responses will cost significantly more than one that gives brief answers.
AI Model Pricing (Per 1M Tokens)
| Model | Input / 1M | Output / 1M |
|---|---|---|
| GPT-4o | $2.50 | $10.00 |
| GPT-4o Mini | $0.15 | $0.60 |
| Claude 3.5 Sonnet | $3.00 | $15.00 |
| Claude 3.5 Haiku | $0.80 | $4.00 |
| Gemini 1.5 Pro | $1.25 | $5.00 |
| Gemini 1.5 Flash | $0.07 | $0.30 |
| Llama 3.1 405B | $3.00 | $3.00 |
| Mistral Large | $2.00 | $6.00 |
Tips for Controlling AI Costs
- Use the smallest model that works — GPT-4o Mini and Gemini Flash handle 80% of use cases at 1/20th the cost. Only escalate to frontier models for complex reasoning, coding, or nuanced writing tasks.
- Cache aggressively — If users ask similar questions, cache the responses. OpenAI and Anthropic both offer prompt caching features that reduce input costs by up to 90%.
- Minimize context window — Don't send your entire conversation history every call. Summarize previous context or use a sliding window. Each unnecessary token in the context is money wasted.
- Set spending alerts — Both OpenAI and Anthropic let you set monthly spend limits and alerts. A runaway loop without limits can burn through hundreds of dollars in minutes.
- Evaluate open-source alternatives — Llama, Mistral, and other open models can be self-hosted or run through providers. Per-token costs are often 50-80% lower than proprietary models.
Frequently Asked Questions
How are AI API costs calculated?
AI APIs charge per token, which is roughly 3/4 of a word. A 1,000-word message is approximately 1,333 tokens. Pricing is typically quoted per 1 million tokens. Input tokens (your prompt) and output tokens (the AI's response) are priced differently, with output usually costing 2-5x more.
What is the cheapest AI model to use?
For most use cases, Gemini 1.5 Flash and GPT-4o Mini offer the best price-to-performance ratio. They're 10-40x cheaper than frontier models while being capable enough for most tasks. Use them as your default and only switch to larger models when quality demands it.
How do I reduce AI API costs?
Key strategies: 1) Use smaller models when possible, 2) Cache frequently used responses, 3) Batch requests to reduce overhead, 4) Optimize prompts to reduce token count, 5) Use streaming to detect bad responses early and stop, 6) Set up rate limits and spending alerts.
Should I use API access or a subscription?
If you use AI for less than ~100 queries per day, a $20/month subscription (ChatGPT Plus, Claude Pro) is usually cheaper and simpler. If you're building applications, processing thousands of requests, or need custom integrations, API access gives you more control and can be cheaper at scale.