Week 4: Metric Design and Business Outcome Linkage · Lesson 4.3

Cost-aware evaluation on a fixed budget

Evaluating every query costs more than running the product. Where should a fixed evaluation budget go?

← All lessons
Browse lessons

Free, self-paced. Read the deck with its speaker notes, work the practice from the slides, then take the week's quiz for a certificate.

Slide 1 of 16

Speaker notes

Welcome back. In the last two lessons you sorted your metrics into blocking and optimization, and you matched each part of the AI Data Analyst to a measurement archetype. So you know what you want to measure. Today's problem is whether you can afford to measure it. Once some of your metrics are LLM judges, and you run them on every query, the evaluation bill can end up bigger than the bill for running the product. And when that happens, somebody above you asks you to cut it. So today we work out how to cut evaluation cost by around 90 percent and still be able to make a release decision. There are three parts to it: sample more where the stakes are higher, spend more on the metrics that gate releases, and send most checks through cheap judges before you pay for an expensive one. Let's start with the classification you already made.

About this lesson

Once some of your metrics are LLM judges, running every metric on every query gets expensive fast. In the lesson’s scenario, the AI Data Analyst handles 10,000 queries a day and costs about $3,000 a month to run, while evaluating everything costs about $33,300 a month. Two judge metrics make up about 90 percent of that. Leadership asks for a 90 percent cut without losing sight of quality.

The obvious answer is to sample 10 percent of everything. That treats every query as equally important, so rare and costly failures like PII leaks are mostly missed while routine traffic gets the same coverage as the dangerous queries.

The lesson uses three strategies instead. Stratified sampling sets coverage per traffic segment based on what a missed failure would cost, with full coverage on safety-critical traffic. Blocking metrics, the ones that gate the release, get the budget first. And a judge cascade runs free rule checks and a small, cheap judge before sending only the unclear cases to the expensive frontier judge.

You cost out each step with a simple formula, working backward from the budget to the coverage you can afford, and you predict whether stratified sampling alone gets under budget before you see the answer.

The demo’s cascade still sends a quarter of narratives to the expensive judge. In the practice you pick a split that sends fewer than a fifth, work out the new monthly bill with the same formula, say what you’d check before trusting it, and write a Cost Allocation Plan with the coverage matrix, total cost, monitoring and what would make you expand coverage.

Go deeper with AI Analytics for Everyone

5-week course: metrics, root cause analysis, experimentation, and storytelling. Think like a Product Data Scientist.

Book 1-on-1 with Shane

30-minute AI evals Q&A. Talk through your specific evaluation challenges and get hands-on guidance.

Finished all 36 lessons? Take the exam and get your free AI Evals certification.

→