--- title: Using LLM Observability to Cut Costs and Improve Performance description: LLM observability covers monitoring, tracing, and evaluating LLM applications to catch hallucinations, control token costs, and diagnose latency issues. Key... canonical: https://daily.dev/posts/using-llm-observability-to-cut-costs-and-improve-performance-np55kgk3t twitter:card: summary_large_image twitter:site: @dailydotdev og:type: website og:site_name: daily.dev og:title: Using LLM Observability to Cut Costs and Improve Performance | daily.dev og:description: LLM observability covers monitoring, tracing, and evaluating LLM applications to catch hallucinations, control token costs, and diagnose latency issues. Key... og:url: https://daily.dev/posts/using-llm-observability-to-cut-costs-and-improve-performance-np55kgk3t og:image: https://api.daily.dev/og/posts/Np55kgK3T.png og:image:alt: Using LLM Observability to Cut Costs and Improve Performance og:image:width: 1200 og:image:height: 630 og:locale: en --- > ## Documentation Index > Fetch the complete documentation index at: https://daily.dev/llms.txt > Use this file to discover all available pages before exploring further. # Using LLM Observability to Cut Costs and Improve Performance **[finout](https://daily.dev/sources/finout)** · 12 min read · 0 upvotes · 0 comments ## Summary LLM observability covers monitoring, tracing, and evaluating LLM applications to catch hallucinations, control token costs, and diagnose latency issues. Key metrics include token consumption, latency, context recall, faithfulness, and decision quality. The post explains how observability tools work across five steps: instrumentation, data collection, workflow mapping, anomaly detection, and alerting. Best practices include end-to-end lifecycle tracing, cost allocation by team or product, real-time anomaly detection, combining automated evaluations with user feedback, and integrating LLM costs with broader cloud spend. The post concludes with a pitch for Finout's FinOps platform as a solution for unified AI cost observability. ## Full article daily.dev links to this article rather than hosting it. Read it at the original source: ## Similar posts on daily.dev - [AI cost observability: A practical guide to understanding and managing LLM spend](https://daily.dev/posts/ai-cost-observability-a-practical-guide-to-understanding-and-managing-llm-spend-8pc0rjuej) · portkey · 0 upvotes · 0 comments - [LLMs create a new blind spot in observability](https://daily.dev/posts/llms-create-a-new-blind-spot-in-observability-2nt8yv81n) · The New Stack · 2 upvotes · 0 comments --- Tags: [#llm](https://daily.dev/tags/llm), [#finops](https://daily.dev/tags/finops), [#llm-observability](https://daily.dev/tags/llm-observability) [View this post on daily.dev](https://daily.dev/posts/using-llm-observability-to-cut-costs-and-improve-performance-np55kgk3t) ```json {"@context":"https://schema.org","@graph":[{"@type":"Organization","@id":"https://daily.dev/#organization","name":"daily.dev","url":"https://daily.dev","logo":{"@type":"ImageObject","url":"https://daily.dev/apple-touch-icon.png","width":180,"height":180},"sameAs":["https://twitter.com/dailydotdev","https://github.com/dailydotdev","https://www.linkedin.com/company/daily-dev-ltd"]},{"@type":"WebSite","@id":"https://daily.dev/#website","url":"https://daily.dev","name":"daily.dev","publisher":{"@id":"https://daily.dev/#organization"},"potentialAction":{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https://daily.dev/search?q={search_term_string}"},"query-input":"required name=search_term_string"}}]} {"@context":"https://schema.org","@type":"TechArticle","headline":"Using LLM Observability to Cut Costs and Improve Performance","url":"https://daily.dev/posts/using-llm-observability-to-cut-costs-and-improve-performance-np55kgk3t","mainEntityOfPage":{"@type":"WebPage","@id":"https://daily.dev/posts/using-llm-observability-to-cut-costs-and-improve-performance-np55kgk3t"},"datePublished":"2026-08-02T11:30:13.099Z","dateModified":"2026-08-03T11:30:43.867Z","description":"LLM observability covers monitoring, tracing, and evaluating LLM applications to catch hallucinations, control token costs, and diagnose latency issues. 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