The Economics of Prompt Caching: Anthropic's Path to 90% Cost Savings

Anthropic's prompt caching is one of the highest-ROI cost-reduction techniques for LLM applications, but its non-uniform pricing model requires careful analysis to maximize savings. Break-even arrives as early as the second cached request for 5-minute TTL, making it immediately valuable for production workloads with stable context. Understanding the pricing tiers and TTL trade-offs is essential for engineers building cost-efficient AI applications at scale.