How is AI API pricing calculated?
AI API providers charge based on the number of tokens processed. Tokens are pieces of text (roughly 4 characters or 0.75 words each). You pay separately for input tokens (what you send to the model) and output tokens (what the model generates). Multiply your token count by the per-token rate to get the total cost.
What is the difference between input and output tokens?
Input tokens are the text you send to the API, including your prompt, system instructions, and any context. Output tokens are the text the model generates in response. Output tokens typically cost 2-5x more than input tokens because generation requires more compute.
Which AI API is cheapest?
For simple tasks, Google Gemini 1.5 Flash and Mistral's Ministral 8B offer some of the lowest per-token rates. For complex reasoning, GPT-4o Mini and Claude 3.5 Haiku provide strong performance at budget-friendly prices. The cheapest option depends on your quality requirements and use case.
How do I estimate my monthly token usage?
A typical API call uses 500-2,000 input tokens and generates 200-1,000 output tokens. Multiply by your expected number of requests per month. For example, 10,000 requests at 1,000 input and 500 output tokens each equals 10M input tokens and 5M output tokens per month.
Are there free tiers for AI APIs?
Yes, most providers offer free credits or trial tiers. Google provides a generous free tier for Gemini, OpenAI gives new accounts starter credits, and Anthropic offers trial credits. Meta's Llama models are open-source and free to self-host, though hosted inference providers charge for compute.
What affects the total cost beyond token pricing?
Beyond token pricing, costs can vary based on rate limits (needing a higher tier for more throughput), fine-tuning fees, image or audio inputs, batch vs real-time pricing, and whether you use prompt caching. Some providers also offer volume discounts for committed usage.