Cache-Aware Prompt Compression:A Two-Tier Cost Model for LLM API Caching
Production LLM deployments combine two cost-reduction primitives: prompt caching (a discounted rate for re-used token prefixes) and prompt compression (fewer tokens sent). The compression literature has standardized on query-aware methods that produce a different compressed prefix per query, mechanically invalidating the prefix-strict cache on every call. We characterize this cost empirically on Anthropic's Sonnet 4.6 API and find caching is far from the rho=1.0 ideal the literature assumes: Sonnet's cache has a two-tier architecture with a sharp threshold near 3,500 tokens, below which the hit rate plateaus at rho~0.83 across 30-call sessions. Our cost model predicts, and experiments con...
| Authors | Yan Song |
|---|---|
| Primary category | cs.LG |
| Published | 17 July 2026 |
| Last updated at source | 17 July 2026 |
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