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What are tokens and why do they matter for cost and limits?

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01

Understand the problem

Tokenization is the unit of everything: pricing, context limits, latency and even model quirks.

tokenstokenizationpricingfundamentals
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Tokens are the sub-word units a model reads and writes (roughly 4 characters or 0.75 words of English each). Everything is denominated in tokens: API pricing (per input/output token), the context-window limit, and generation latency (one forward pass per output token). Tokenization also explains quirks like poor charac

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04

Read the code

Counting tokens before sending
import { countTokens } from "@anthropic-ai/tokenizer";

const prompt = buildPrompt(docs, question);
const n = countTokens(prompt);

// budget check before the call, not after the invoice
if (n > MAX_INPUT_BUDGET) {
  docs = rankAndTrim(docs, MAX_INPUT_BUDGET - countTokens(question));
}
05

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