Latency vs. Cost Trade-offs in Enterprise AI

• Michael Simonetti, BSc BE MTE
• 9 months ago
• Categories: Advice, Articles & Events
• Tags: AI, AI Strategy, Artificial Intelligence, Clients, Software

Speed, quality, and cost — why you can’t have all three (yet)

Powerful AI comes at a price — and not just financial. Models like GPT-4 and Claude 3 Opus are excellent at reasoning and complex outputs, but they’re slower and more expensive to run than smaller, faster models like GPT-3.5 or Claude Instant. In high-volume enterprise environments, this latency-to-cost ratio can make or break your project.



The Triangle of Pain: Speed, Quality, Cost

In most enterprise use cases, you want:

• High speed (low latency)
• High output quality (no hallucinations, good reasoning)
• Low cost (affordable at scale)

Unfortunately, current LLM technology only lets you reliably pick two:

Real-World Example:

If your customer support bot handles 1,000 chats per hour:

• Using GPT-4 might cost $25/hour and respond in ~3 seconds
• Using GPT-3.5 might cost $2/hour and respond in ~1 second
• But GPT-4 gives 20% better accuracy, meaning fewer escalations

Which do you choose? That depends on your use case.

Solution: Tiered or Hybrid Models

Use a fast, cheap model as your default (e.g. GPT-3.5), and escalate only to a slower, more expensive model when:

• Confidence is low
• The user repeats the request
• A task requires high reasoning or summarisation

When planning AI at scale, don’t just ask “What’s the best model?” — ask “What’s fast enough and smart enough at a cost that scales?” Balancing latency, quality and budget is the difference between a flashy demo and a commercially viable product.

Want help designing AI systems that perform under pressure? AndMine can help you scale smart — not just big.