The Efficiency Frontier: A Unified Framework for Cost-Performance Optimization in LLM Context Management

Abstract

Large language models (LLMs) increasingly rely on long-context processing, but expanding context windows introduces substantial computational and financial costs. Existing context reduction approaches, including retrieval and memory compression methods, are typically evaluated using performance and efficiency metrics independently, limiting systematic comparison and deployment-aware decision-making. This paper introduces The Efficiency Frontier, a unified framework for cost--performance optimization in LLM context management. The framework models context strategy selection as a deployment-aware optimization problem that jointly accounts for task performance, token cost, and preprocessing reuse through amortized cost modeling. Unlike existing evaluations that compare methods in isolation, the proposed framework enables decision-oriented analysis. It identifies when different context management strategies become preferable under varying operational conditions. Experiments on HotpotQA reveal distinct operational regimes and transition boundaries between retrieval-based and preprocessing-based strategies. Results show that deployment-aware optimization reduces effective token usage by approximately 25% at comparable performance, enabling more cost-efficient deployment of large language model systems, while amortized memory compression achieves over 50% lower token cost relative to full-context prompting in higher-performance settings. Overall, the proposed framework provides a principled and practical foundation for evaluating and deploying scalable, efficient, and sustainable LLM systems across enterprise, scientific, and public-sector applications.