What is Prompt Caching and How it Saves Money?
Understand the technology that allows you to reuse prompt prefixes for massive cost and speed gains.
Prompt Caching is one of the most important cost-saving features introduced by AI providers like Anthropic and DeepSeek. It allows the model to "remember" the beginning of your prompt.
Caching Long Contexts
If you have a 10,000-word knowledge base or a long system instruction that stays the same across every user request, you can cache it. Instead of paying to process those 10,000 words every time, you only pay a tiny fraction for the "cache hit," often reducing costs by 90% for high-context apps.
Accelerating Response Times
Beyond cost, caching significantly improves speed. Because the model doesn't have to re-read the cached part of the prompt, the response starts almost instantly. This is a game-changer for RAG systems and coding assistants where the "background context" is large but stays mostly the same.