May 5, 2026 · 5 min read

# How to Reduce AI Coding Agent Costs

Claude Code, Cursor, and Copilot bills add up. Here's where the money goes and how to cut it.

## Where your money actually goes

If you're using Claude Code on the API (not the subscription), your bill breaks down like this:

Component | % of bill | Why
--- | --- | ---
Input tokens | 85-95% | Claude reading your code files for context
Output tokens | 5-15% | Claude's responses

The expensive part isn't Claude's answers. It's Claude reading your code. Every question triggers full-file reads. A medium project session costs $0.14 on Sonnet or $0.70 on Opus, mostly from input.

## 5 ways to reduce costs

### 1. Use a cheaper model for routine tasks

Opus ($15/1M input) is 5x more expensive than Sonnet ($3/1M input). Use Sonnet for most tasks, switch to Opus only for complex reasoning. Haiku ($0.25/1M) works for simple code generation.

### 2. Reduce input tokens (biggest impact)

This is where Code Context Engine fits in. Instead of Claude reading entire files, CCE indexes your codebase and returns only the relevant functions. 94% fewer input tokens, benchmarked.

    uv tool install code-context-engine
    cd your-project
    cce init

Before CCE: 83,681 tokens per query. After: 4,927 tokens. Same answer quality.

### 3. Compress output tokens

Tools like output compression reduce Claude's reply length. CCE includes this built in (4 levels: off, lite, standard, max). Saves 30-75% on output tokens. Smaller impact than input savings but still meaningful.

### 4. Use prompt caching

If you're using the Claude API directly, enable prompt caching. Repeated context (system prompts, file contents) gets cached and costs 90% less on subsequent reads. This is automatic in Claude Code.

### 5. Be specific in your prompts

Vague prompts ("fix the auth") make Claude read more files to understand what you mean. Specific prompts ("fix the JWT expiry check in auth/tokens.py line 42") read fewer files. Less context = lower cost.

## Impact comparison

Technique | Token savings | Effort
--- | --- | ---
Cheaper model | 3-5x cost reduction | One setting change
Code indexing (CCE) | 94% input reduction | One command
Output compression | 30-75% output reduction | One setting
Prompt caching | 90% on repeated context | Automatic
Better prompts | Varies | Habit change

## What this looks like in practice

A developer on Sonnet spending $0.14/session:

Optimization | Session cost
--- | ---
No optimization | $0.14
+ CCE (94% input reduction) | $0.04
+ Output compression | $0.03

That's 5-10 sessions per day without thinking about costs.

### Start with the biggest lever

Input tokens are 85-95% of your bill. Cut them first.

    uv tool install code-context-engine && cce init

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