@ray_fu

Most people don't realize that AI does not read in words, it reads in tokens. Because everyone's using AI, but almost nobody understands how it works. If you are building with AI or using it in your business, knowing these concepts will save you a lot of money.

And honestly, AI is not that complicated once you understand these simple models. Before AI processes anything, it chops your text up into little pieces called tokens. 75 words.

So a word like playing gets split into play and ing and ChatGPT gets split into chat and G and PT. You get it. But the reason why this is important is because you pay in tokens every time you talk to Claude.

Every API you call, every agent that runs, every automation you have is being charged by how many tokens go in and out. The single biggest thing that you can do to cut your token cost is not sending your entire conversation history every single time. Most people don't realize that every time you send a message to AI, it's getting sent with your whole conversation history.

So by message 20, you're not just paying for a new question, you are paying for all the 19 previous messages and 19 previous responses all over again on top of it. To prevent this, tell your AI to compact conversation history or summarize old messages.

If you want a more detailed explanation of how tokens work and how to reduce your spending, just like the video and comment token. And I'll send it to you. Follow for day two.