RAG design and cost — practical engineering

Lesson 2 of 5 in AI for Software Engineers — Co-pilots, RAG & Agents · 22 minutes

RAG systems require thoughtful design. This lesson covers when to use RAG, how to architect it, and how to estimate cost and latency.

What you'll learn

Decide when to use RAG vs. alternatives
Design RAG architecture
Estimate cost and latency
Evaluate RAG quality

From the lesson

RAG (Retrieval-Augmented Generation) is the default pattern for most production AI features. Knowing when to use it, how to architect it well, and how to estimate cost is core software engineering skill. This lesson covers the practical engineering. Prices and limits in this lesson are examples as of 2025; they change often, so check the provider's page. The method matters more than the numbers.

1. When to use RAG (and when not to)

RAG is best for: • Q&A over your specific documents. • Customer support with knowledge base. • Internal policy / HR questions. • Long-tail factual questions. • Citation requirements (model can quote source docs). • Frequently changing data (no need to retrain…