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What Are the Factors That Lower Token Cost?

Understanding how to optimize token cost requires looking at the equation for calculating cost per million tokens. In this equation, many enterprises evaluating AI infrastructure focus on the numerator: the cost per GPU per hour. For cloud deployments, this is the hourly rate paid to a cloud provider; for on-premises deployments, it’s the effective hourly cost derived from amortizing owned infrastructure. The real key to reducing token cost, however, lies in the denominator: maximizing the delivered token output. That denominator carries two business implications. Minimize token cost: When thi

Rethinking AI TCO: Why Cost per Token Is the Only Metric That Matters
Why Does Cost per Token Matter Much More Than FLOPS per Dollar?

The following data for the DeepSeek-R1 AI model demonstrates the difference between theoretical and actual business outcomes. Looking at compute cost alone, the NVIDIA Blackwell platform appears to cost roughly 2x more than NVIDIA Hopper — but compute cost says nothing about the output that investment buys. An analysis of mere FLOPS per dollar suggests a 2x NVIDIA Blackwell advantage compared with the NVIDIA Hopper architecture. However, the actual outcome is orders of magnitude different: Blackwell delivers more than 50x greater token output per watt than Hopper, resulting in nearly 35x lower

Rethinking AI TCO: Why Cost per Token Is the Only Metric That Matters

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