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RUNLOCALAI · v38
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  6. /Ch. 14
Hybrid Local-Cloud AI Architecture

14. Cost Analytics

Chapter 14 of 18 · 15 min
KEY INSIGHT

Cost analytics transforms infrastructure decisions from engineering concerns into business conversations. Visibility enables optimization that reduces waste without compromising capability.

Cost analytics transforms raw usage data into actionable financial intelligence. Without systematic cost tracking, organizations discover budget overruns only at billing time—too late for course correction. Real-time cost visibility enables dynamic routing decisions that optimize spend without degrading quality.

The fundamental cost model requires per-token pricing from cloud providers and per-kWh pricing from local infrastructure. Cloud costs vary by model capability and context window size. Local costs vary by GPU model, utilization efficiency, and regional electricity rates. A unified cost model normalizes these variables into comparable metrics.

from dataclasses import dataclass
from decimal import Decimal

@dataclass
class CostBreakdown:
    provider: str
    model: str
    input_tokens: int
    output_tokens: int
    compute_cost: Decimal
    transfer_cost: Decimal = Decimal("0")
    
    @property
    def total_cost(self) -> Decimal:
        return self.compute_cost + self.transfer_cost
    
    @property
    def cost_per_1k_tokens(self) -> Decimal:
        total_tokens = self.input_tokens + self.output_tokens
        if total_tokens == 0:
            return Decimal("0")
        return (self.total_cost / total_tokens) * 1000

class CostAnalyzer:
    def __init__(self, pricing: dict[str, ProviderPricing], 
                 gpu_config: GPUConfig):
        self.pricing = pricing
        self.gpu = gpu_config
    
    def calculate_cloud_cost(self, provider: str, 
                             model: str,
                             input_tokens: int, 
                             output_tokens: int) -> CostBreakdown:
        rates = self.pricing[provider].get_rates(model)
        input_cost = Decimal(input_tokens) * rates.input_per_token
        output_cost = Decimal(output_tokens) * rates.output_per_token
        return CostBreakdown(
            provider=provider, model=model,
            input_tokens=input_tokens,
            output_tokens=output_tokens,
            compute_cost=input_cost + output_cost
        )
    
    def calculate_local_cost(self, model: str,
                             input_tokens: int,
                             output_tokens: int,
                             inference_time_ms: int) -> CostBreakdown:
        gpu_power_watts = self.gpu.get_power_draw(model)
        kwh_cost = Decimal(self.gpu.electricity_rate)
        
        hours = Decimal(inference_time_ms) / 3_600_000
        kwh_consumed = Decimal(gpu_power_watts) / 1000 * hours
        compute_cost = kwh_consumed * kwh_cost
        
        return CostBreakdown(
            provider="local", model=model,
            input_tokens=input_tokens,
            output_tokens=output_tokens,
            compute_cost=compute_cost
        )

Cost attribution enables department-level or project-level budget tracking. Tags embedded in requests flow through to cost reports, creating accountability without requiring separate infrastructure. Monthly cost forecasting based on usage trends informs budget planning and identifies anomalies for investigation.

EXERCISE

Build a cost dashboard comparing local versus cloud inference costs over a 30-day period. Identify the break-even point where local infrastructure becomes cost-advantageous for your usage patterns.

← Chapter 13
Cross-Tier Monitoring
Chapter 15 →
Usage Tracking