How are API costs calculated?
API costs are driven by three variables: Input Context, Output Size, and Frequency. When your developers code, their IDE (via Cursor, Copilot, etc.) sends the codebase context to the model—this is the Input. The model processes this to return generated code—this is the Output. Both are billed specifically per 1 million tokens, meaning your enterprise pays exactly for the compute it utilizes.
Why use the API vs. Subscriptions?
SaaS subscriptions (like Claude Pro or ChatGPT Plus) charge a flat rate (typically $20/mo) but enforce harsh rate limits that throttle engineering velocity. By connecting directly to the API, you unlock unthrottled bandwidth and superior data privacy. Usage scales dynamically—saving money on light users while unblocking heavy users from arbitrary messaging limits.