What 'Thinking' Actually Costs - Reasoning Models and Test-Time Compute
When you enable extended thinking on Claude or switch to an o-series model, the price per request jumps 3 to 10x. That is not because you are getting a smarter model. You are getting the same model spending more computation on your specific question at inference time. Understanding the difference between training-time compute and inference-time compute changes how you decide when these models are worth using. How a Standard Model Generates Output A standard LLM takes all the input tokens (system prompt, history, user message), runs them through the transformer layers in a single forward pass to predict the next token, then samples that token and appends it to the sequence. It repeats this process until it generates an end token. Each forward pass scales with model size. Total cost scales linearly with output token count. ...