What Is AI Token Optimisation?
AI models charge by the token. A token is a small chunk of text, often a short word or part of a longer one. Most large language models split text up using a method called byte pair encoding, so common words are one token and rarer words become two or more. As a rough guide, 1,000 tokens is about 750 English words.
You pay for input tokens, which are everything you send in: system instructions, documents, chat history and the user's question. You also pay for output tokens, which are everything the model generates in reply. Output tokens usually cost several times more than input tokens, so a chatty answer can cost more than a long question.
AI token optimisation is the work of paying less for the same results. In practice that means sending fewer tokens, caching what repeats, asking for only the output you need and choosing the right AI models for each job. Then we check that output quality holds, because a saving that makes the work worse isn't a saving.