Why API Latency Matters for AI Infrastructure Costs

When analyzing LLM costs, developers focus obsessively on the "Price per 1M Tokens." However, a model's latency—how fast it generates responses—has a profound, hidden impact on your total infrastructure bill.

The Cost of Waiting

Modern applications run on serverless functions (like AWS Lambda or Vercel Edge Functions). These platforms bill you based on execution time.

If you request a 500-token summary from an API:

• Model A (Fast): Generates 100 tokens/second. The request takes 5 seconds.
• Model B (Slow): Generates 20 tokens/second. The request takes 25 seconds.

Even if Model B's token price is cheaper, you are paying your cloud provider to keep a server instance open and waiting for an extra 20 seconds. At scale, these extended execution times can drastically inflate your AWS/GCP bill.

Streaming to the Rescue

Always implement Streaming (Server-Sent Events). Streaming allows your backend to close the heavy connection early and pipe the tokens directly to the client as they are generated, improving user experience and minimizing serverless timeouts.