Token Optimization Strategies: Save 50% on LLM Costs

Tokens are money. Here are 10 specific strategies to reduce token usage without sacrificing quality.

Strategy 1: Compress Context (30-40% savings)

Remove fluff. Replace long preambles with concise instructions. Example: 500-token system prompt → 100-token system prompt.

Strategy 2: Use Structured Output (25-35%)

Ask for JSON, not prose. AI returns 200 tokens instead of 800.

Strategy 3: Semantic Compression (20-30%)

Use embeddings to store & retrieve only relevant context instead of full data.

Strategy 4: Caching (90% savings for repeats)

Cache long context windows. Follow-up requests cost 90% less.

Strategies 5-10

Batch processing, fewer examples, truncate context, async over real-time, model downgrade, API consolidation.