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Equation 5 · Part 4 · AI Inference Economics in Practice: An Advanced Technical Guide

=

R∗=w−r1−rR^{*} = \frac{w - r}{1 - r}
=

What this part means

The expressions on both sides represent the same quantity under the stated assumptions.

Its job in the formula

The equals sign connects the complete expression on the left with the complete expression on the right. Both sides must have compatible units.

The passage around this formula

That convergence on roughly one tenth of base input for a cache read — independently verified today across all three platforms [ 2 , 6 , 10 ] — supports a design rule. Let w be the write-price multiplier for the chosen retention window and r ≈\approx 0.1 the read-price multiplier. For a prefix served identically R times within that window — the first serving is the write, the remaining R-1 are reads — caching beats never caching once R∗=w−r1−rR^{*} = \frac{w - r}{1 - r}. is exceeded. At Anthropic’s five-minute rate, w = 1.25 and R∗R^{*} ≈\approx 1.28 : the prefix pays for itself starting with the first read after the write, matching the break-even Anthropic’s pricing page states for that duration [ 6 ] . At the…

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Learn the underlying idea

An equals sign says that the expression on its left and the expression on its right have the same value under the stated definitions and assumptions.

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Sources cited in the surrounding passage

These citations provide research context; check each source for the exact claim it supports.