You are identifying the highest-impact optimization for a deployment whose token cost is dominated by...

Option C addresses both components responsible for the excessive cost. Anthropic prompt caching allows stable, repeatedly submitted prompt material—such as system instructions, tool definitions, and reusable background information—to be placed in a consistent prefix. After that prefix is written to the cache, qualifying subsequent requests can reuse it at the lower cache-read cost instead of repeatedly processing the same content at the standard input-token rate.

Retrieval must be optimized separately. Supplying an entire document collection or excessively deep search results increases cost, consumes context capacity, and may reduce answer quality by surrounding the relevant evidence with distracting material. Retrieval should select the smallest set of authoritative passages that provides sufficient evidence for the current query. This typically requires relevance scoring, deduplication, metadata filtering, reranking, and explicit token-budget limits.

Increasing retrieval depth or expanding the repeated system prompt directly worsens the identified cost driver. Moving every request to a heavier model changes the unit economics but does not correct inefficient context construction. The recommended optimization therefore combines prefix caching with query-specific context pruning, followed by evaluation to confirm that reduced context does not lower task accuracy.

Study Guide references/topics: [Prompt caching](https://docs.anthropic.com/en/docs/build-with-claude/prompt-caching); [effective context engineering] (https://www.anthropic.com/engineering/effective-context-engineering-for-ai-agents); retrieval precision; token-cost analysis; cache-prefix stability.

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