Cost-Effective AI Development: A Research Review

# Cost-Effective AI Development: A Research Review

**Medical ML Research Series**

**By Oleh Ivchenko, PhD Candidate**
**Affiliation:** Odessa Polytechnic National University | Stabilarity Hub | February 2026

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$5.6M

DeepSeek-V3 Training Cost

$249K

DeepSeek-R1 Training Cost

400:1

Cost Reduction vs GPT-4

94.5%

Compute Reduction with MoE

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## Introduction

**The AI industry is undergoing a paradigm shift.** While headlines focus on billion-dollar investments, a quiet revolution in cost-effective AI development is reshaping what’s possible. This comprehensive review synthesizes the latest research to reveal how organizations can achieve state-of-the-art AI capabilities at a fraction of traditional costs.

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## The Cost Revolution: From $500M to $5M

graph LR A[Traditional AI] --> B[High Cost] B --> C[Efficient Methods] C --> D[Low Cost AI]

In January 2025, DeepSeek’s release of their R1 model sent shockwaves through the AI investment community. The revelation wasn’t just about performance—it was about economics. Training a 671-billion parameter model cost approximately **$5.6 million**—an order of magnitude less than the $100+ million estimates for comparable Western models.

Key Insight

$249,000

Cost to train DeepSeek-R1 on top of V3 — roughly the cost of a single senior ML engineer’s annual salary

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## Comparative Training Cost Analysis

Model	Parameters	Training Cost	GPU Hours
GPT-4 (OpenAI)	~1.7T (est.)	$100M+	Not disclosed
Claude 3 Opus	Not disclosed	$50-100M (est.)	Not disclosed
Llama 3.1	405B	~$30M (est.)	Not disclosed
DeepSeek-V3	671B (37B active)	$5.6M	2.788M H800
DeepSeek-R1	671B base	$249K	~500K H800

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## Key Techniques for Cost-Effective AI

graph TD A[Cost Reduction] --> B[Mixture of Experts] A --> C[Latent Attention] A --> D[RLVR Training] A --> E[Distillation]

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## 1. Mixture of Experts (MoE) Architecture

The MoE approach activates only a subset of model parameters per token. DeepSeek-V3 has 671B total parameters but only **37B active per inference**—a 94.5% reduction in computational cost per forward pass.

graph LR A[Token] --> B[Router] B --> C[Selected Experts] C --> D[Output]

Key Innovation

“DeepSeek-V3 adopts Multi-head Latent Attention (MLA) and DeepSeekMoE architectures, which were thoroughly validated in DeepSeek-V2.” — DeepSeek-V3 Technical Report

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## 2. Reinforcement Learning with Verifiable Rewards (RLVR)

Unlike expensive RLHF which requires human annotators, RLVR uses automatically verifiable rewards to train models at scale:

Approach	Verification Method	Cost
RLHF (Traditional)	Human annotators	$$$$ High
RLVR (New)	Math correctness, code execution	$ Low

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## 3. Post-Training Revolution

graph LR A[Pre Training] --> B[High Cost] B --> C[Post Training] C --> D[Low Cost Results]

The Post-Training Revolution

The most significant advances now happen in post-training, not pre-training. This is accessible and democratizing. You don’t need billions to build frontier AI—you need domain expertise and post-training techniques.

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## Medical AI Cost Implications

Strategy	Cost Savings	Application to ScanLab
MoE Architecture	90%+ inference cost	Efficient multi-pathology detection
Transfer Learning	99% training cost	Leverage pre-trained medical models
Knowledge Distillation	80% model size	Deploy on Ukrainian hospital hardware
Post-Training Fine-tuning	95%+ vs full training	Adapt to Ukrainian imaging protocols

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## Unique Conclusions

Conclusion 1

The Democratization Threshold

State-of-the-art AI is now achievable for $5M or less, opening doors for Ukrainian institutions

Conclusion 2

Post-Training > Pre-Training

Domain expertise + efficient techniques matter more than raw compute

Conclusion 3

MoE for Medical AI

Sparse architectures enable affordable deployment even on limited hardware

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## References

1. DeepSeek-V3 Technical Report. arXiv:2412.19437, 2024.
2. “DeepSeek Reports Shockingly Low Training Costs.” ZDNet, 2025.
3. Raschka, S. “State of LLMs 2025.” Sebastian Raschka Magazine.
4. DeepSeek-R1 Technical Report. Nature, September 2025.
5. “The Post-Training Revolution.” AI Research Review, 2025.

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**Author:** Oleh Ivchenko, PhD Candidate
**Affiliation:** Odessa Polytechnic National University | Stabilarity Hub