Cost-Aware Query Routing in RAG: Empirical Analysis of Retrieval Depth Tradeoffs

Abstract

Retrieval-augmented generation (RAG) faces a fundamental three-way tension: deeper retrieval improves factual grounding but inflates token costs and end-to-end latency. Static retrieval configurations cannot resolve this tension across heterogeneous query workloads -- simple definitional queries waste budget on unnecessary context, while complex analytical prompts are underserved by shallow retrieval. This paper introduces \emph{Cost-Aware RAG} (CA-RAG), a per-query routing framework that selects from a discrete catalog of \emph{strategy bundles} -- each coupling a retrieval depth (from retrieval-free direct inference to top-$k{=}10$ dense retrieval) with a fixed generation profile -- by maximizing a scalar utility that linearly combines an estimated quality prior with normalized penalties for predicted latency and total billed tokens. CA-RAG is implemented with FAISS-backed dense retrieval and OpenAI chat/embedding APIs, and evaluated on a 28-query benchmark spanning four bundles. The router dynamically exercises all bundles, achieving \textbf{26\% fewer billed tokens} than always-heavy retrieval and \textbf{34\% lower mean latency} than always-direct inference while maintaining equivalent answer quality. Per-query delta analysis reveals that savings are non-uniform and concentrated in simpler queries, motivating complexity-aware guardrails. Sensitivity analysis confirms that the same bundle catalog supports multiple cost-latency-quality operating points through weight adjustment alone. All results are generated directly from logged CSV artifacts for full reproducibility. CA-RAG provides a transparent, auditable foundation for cost-conscious LLM deployments.