Understanding LLM Billing: From Characters to Tokens 

Understanding LLM Billing: From Characters to Tokens 

Large Language Models (LLMs) are moving towards a token-based system rather than character counts. This article delves into the rationale behind token usage, variations in tokenization among providers such as OpenAI, Google Cloud, Cohere, and others, cost estimation strategies, and the benefits of platforms like Eden AI for model utilization.

What’s the difference between tokens and characters? 

Tokens and characters serve distinct roles in the realm of Large Language Models (LLMs), each influencing how text is processed and understood.


  • Fundamental units of written language, represent individual letters, numbers, and symbols
  • Computationally intensive and may overlook higher-level linguistic structures
  • Lack semantic granularity for nuanced language comprehension.


  • Encompass entire words, parts of words, or punctuation marks.
  • Capture semantic information and linguistic context.
  • Easier for LLMs to understand the underlying meaning and structure of language
  • Facilitates sophisticated language tasks such as natural language understanding, generation, and translation.
  • According to the ChatGPT LLM tokenizer, some general rules of thumb for defining tokens are that one token generally corresponds to ~4 characters of text for common English text, translating to roughly ¾ of a word (so 100 tokens ~= 75 words).

Why Use Tokens Instead of Characters?

Tokenization, the process of breaking text into meaningful units called tokens, offers significant advantages in the realm of Large Language Models (LLMs). By standardizing inputs, so that each unit carries a similar amount of semantic information, tokenization enhances the consistency and accuracy of language processing tasks. 

Additionally, processing text at the token level improves computational efficiency by allowing models to focus on meaningful linguistic structures rather than individual characters. 

Moreover, tokenization aids in cost forecasting by enabling users to estimate resource usage and associated costs more accurately, thus informing better budgeting and resource allocation decisions. 

In essence, tokenization plays a pivotal role in enhancing both the performance and cost-effectiveness of LLMs by streamlining language processing tasks.

Differences in Token Representation Among LLM Providers

Each LLM provider has a unique approach to tokenization, reflecting their model architectures and design philosophies:


Implements a dynamic tokenizer capable of segmenting text into tokens representing complete words, word fragments, or punctuation, leveraging a predefined vocabulary. 

Note: tokenization methods may vary across different models, such as GPT-3 and GPT-4. Check out their tokenizer took to understand how a piece of text might be tokenized by a language model, and the total count of tokens in that piece of text.

Google Cloud

Relies on methods like WordPiece or SentencePiece to decompose text into manageable components, including subwords or characters, a particularly effective approach for handling infrequent or specialized vocabulary. 

Note: While this holds true for Google's open-source models, like BERT, it's unclear if newer models such as Gemini adhere to the same tokenization techniques.


Embraces byte pair encoding (BPE), dividing words into frequently occurring subword sequences (cf. Cohere's documentation). 


Likely employs similar tokenization methodologies, emphasizing efficient processing and potentially integrating novel techniques to accommodate linguistic nuances. 

Details regarding Mistral's tokenization are available in their open-source Tokenizer v3 documentation.

For more details on how they tokenize : https://docs.mistral.ai/guides/tokenization/

Understanding these differences is crucial for developers aiming to optimize the performance and cost-efficiency of their applications across different LLM platforms.

Limitations on Token Inputs for LLMs

Token limits refer to the maximum number of tokens (words or subwords) that a language model can process in a single input or generate in a single output. Given that these tokens are stored and managed in memory, these restrictions serve to maintain the model's efficiency and streamline resource usage. Below are some examples of Language Model (LLM) constraints.

Although the max token limitation is necessary, it defines the LLM parameters and limits the model’s performance and usability. Being bound by a set token count restricts the model from analyzing text beyond this limit. Consequently, any contextual cues outside this maximum token range are disregarded during analysis, potentially constraining the quality of outcomes. Moreover, it poses challenges for users dealing with extensive text documents.

Estimating Costs Based on Use Cases

To estimate costs effectively, consider the following steps:

  1. Understand Token Limits: First, ascertain how many tokens each provider allows per input and the maximum number of tokens that their models can process in a single request.
  2. Evaluate Text Length: Analyze the average length of texts you need to process, converting these into the number of tokens they would typically comprise.
  3. Calculate Token Consumption: Multiply the number of tokens per request by the frequency of your requests to estimate total token usage.
  4. Compare Pricing: Each provider has different pricing strategies based on the number of tokens processed. Understanding these will help you calculate the expected costs.

Why Eden AI is an Optimal Choice for Using Multiple LLM Providers

Eden AI shines as a platform that simplifies the integration and management of multiple LLM APIs. Here’s why it’s particularly advantageous:

Multiple AI Engines in one API key Eden AI
  • Unified API: Eden AI provides a single API that interfaces with multiple LLM providers, allowing seamless switching and comparison.
  • Cost Efficiency: Users can compare performance and costs across different LLMs in real-time, optimizing both financial and computational resources.
  • Simplified Management: Handling API keys, managing multiple vendor relationships, and billing processes are streamlined.


In conclusion, the move from characters to tokens in billing and processing by LLM APIs signifies a maturation in the field, aligning billing more closely with the technological demands of processing language. 

Platforms like Eden AI further enhance this landscape by offering a cohesive framework to access and manage these sophisticated tools, ensuring that businesses can leverage the best of AI language processing efficiently and cost-effectively.

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