How does Anthropic prompt caching primarily reduce cost and latency on repeated requests?
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Short Explanation and Infographic
Put the big stable stuff up front — system prompts, tools, docs — mark it cacheable, and later calls reuse that prefix cheaply.
Full explanation below image
Full Explanation
Prompt caching lets you designate large, reusable prompt prefixes (system instructions, tool definitions, RAG context, long documents). After a cache write, subsequent requests that share the same prefix read from cache at reduced token pricing and with lower time-to-first-token. It is not permanent multi-week conversation storage, client GPU weights, or skipping tokenization.