Prompt Caching Explained: How to Cut LLM API Costs and Latency Across OpenAI, Anthropic and Gemini

Prompt Caching Explained: How to Cut LLM API Costs and Latency Across OpenAI, Anthropic and Gemini

๐Ÿ“– 1 min read

Most production LLM applications send the same large block of text again and again: a long system prompt, tool definitions, a policy document, or a codebase snapshot. Without caching, you pay full price to process that identical prefix on every single request.

Prompt caching fixes this. The provider stores the processed prefix and reuses it on later requests, which lowers the cost of those cached input tokens and cuts time-to-first-token.


1. How Each Provider Implements Caching

Provider How it is enabled What you control
OpenAI Automatic for prompts above a minimum length Prompt structure only; cached tokens are reported in usage
Anthropic Explicit cache_control breakpoints on message blocks Which blocks are cached and the cache lifetime
Google Gemini Implicit caching on supported models, plus explicit context caches via the API Cache objects with a time-to-live for large shared context

Discount levels and minimum token thresholds change over time, so check each providerโ€™s current pricing page before building cost models.


2. Structure Prompts for Cache Hits

Caches match on an exact prefix. Put everything static first and everything dynamic last:

[ static system prompt ]      <- cached
[ tool / function schemas ]   <- cached
[ reference documents ]       <- cached
[ conversation history ]      <- partly cached as it grows
[ latest user message ]       <- never cached

The most common mistake is injecting the current date, a request ID or the userโ€™s name into the first line of the system prompt. That single change breaks the cache for every token that follows.


3. Explicit Caching with Anthropic

import anthropic

client = anthropic.Anthropic()

response = client.messages.create(
    model="claude-sonnet-4-5",
    max_tokens=1024,
    system=[
        {
            "type": "text",
            "text": LONG_POLICY_DOCUMENT,
            "cache_control": {"type": "ephemeral"},
        }
    ],
    messages=[{"role": "user", "content": user_question}],
)

print(response.usage)  # shows cache creation vs cache read tokens

The first call writes the cache; later calls within the cache lifetime read from it.


4. Measure, Do Not Assume

Every provider returns cache statistics in the usage object. Log them per request and track:

  • Cache hit ratio: cached input tokens divided by total input tokens
  • Effective input cost: blended price after cache discounts
  • Time-to-first-token: before and after enabling caching

If your hit ratio is low, look for dynamic content leaking into the prefix. In well-structured agent and RAG pipelines, most input tokens can come from cache, which is where the large savings appear.

EXCEL / SHEETS TEMPLATE

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Muhammad Usama
Muhammad Usama Digital Marketing expert focused on creating impactful online strategies.
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