We saved $500k by switching from custom AI to a $2/month Claude API — here's the math

We saved $500k by switching from custom AI to a $2/month Claude API — here's the math A story on Hacker News this week caught my attention: a team rewrote JSONata with AI in a single day and saved $500,000 in engineering costs. The discussion was fascinating, but buried in the comments was the real lesson: the cost of AI isn't just the model. It's everything around the model. I've been building SimplyLouie — a $2/month Claude API — for three months. Here's what I learned about where AI costs actually come from. The Hidden Costs Nobody Talks About When most teams evaluate AI spend, they look at the API line item. That's the wrong number. The real costs are: Prompt engineering time — Every hour your engineers spend tuning prompts is billable Infrastructure overhead — Rate limiters, caching layers, retry logic, monitoring Multiple provider management — If you're running OpenAI + Anthropic + Gemini, you're managing 3 billing relationships, 3 API formats, 3 failure modes Context window wast