Key Takeaways

Fine-tuned Qwen3-14B achieved 93.4% accuracy (beating 100B+ base models)

Prompt engineering delivered +34% accuracy, equivalent to 5-10x model scaling

LLM labeling works: $26 for 8,000 labels with dual-model approach

We spent weeks fine-tuning 8+ language models on a text classification task, from tiny 0.6B models to 14B behemoths. The question:

Could a well-tuned small model match, or beat, models 10x its size?

The answer surprised us, and the lessons learned apply far beyond our specific use case. While we do our best, this is not an academic paper, but rather a practical, empirical account of what we tried, what failed, and what you can apply to your own fine-tuning projects.

Glossary

This post assumes familiarity with ML fundamentals (training/validation splits, classification metrics) and basic LLM concepts. Here’s a quick glossary:

Term	Definition
Parameters (4B, 14B)	The number of learnable weights in a model that roughly correlates with capability and cost
Fine-tuning	Training an existing model on task-specific data to improve performance on that task
LoRA	Low-Rank Adaptation, which trains only 1-5% of model weights, dramatically reducing memory and compute requirements
Prompt engineering	Designing input text/instructions to improve model output without changing model weights

The Business Need

At Orq.ai, we process thousands of conversational traces daily. Understanding what users are discussing (technology questions, business inquiries, creative requests) can give valuable insights to clients. Manual classification doesn’t scale. We needed automated topic classification that’s fast, accurate, and cost-effective.

The Technical Challenge

Text classification sounds simple until you try it. We started with 7 main categories (Technology, Science, Arts, Economics, Personal Development, History, Other) and initially attempted 56 subtopics. The boundaries are fuzzy: is “AI ethics” Technology, Science, or Personal Development? Is “startup funding” Economics or Technology?

Our Goal

Could we fine-tune a 4B or 14B parameter model to beat larger base models? If so, we’d get faster inference, lower costs, and the ability to self-host. The prize: production-quality classification at a fraction of the cost.

The Baseline: What We Were Trying to Beat

We chose the Qwen3 model family for a specific reason: it offers a wide range of sizes (0.6B to 235B) within the same architecture. This let us isolate the effect of model scaling without confounding variables like different tokenizers or training approaches.

Our fine-tuning setup:

Method: LoRA (Low-Rank Adaptation), which trains only 1-5% of model weights

Configuration: Rank 16, alpha 8, learning rate 0.0002

Platform: Together.ai for most runs, OpenAI for comparison

DistilBERT as Floor

Every ML project needs a baseline. DistilBERT (66M parameters) is the classic choice for text classification: small, fast, well-understood. On our 8k balanced dataset, it achieved 92.43% accuracy with 92.63% macro F1.

Why so high? DistilBERT trains all its weights during fine-tuning, not just 1-5% like LoRA. Its encoder architecture is also optimized for understanding tasks like classification. This set a surprisingly high bar: any fine-tuned LLM would need to match a model 60-200x smaller.

Large Base Models as Ceiling

Model	Parameters	Accuracy
GLM-4.5-Air-FP8	106B	88%
Qwen3-Next-80B	80B	87%
gpt-oss-20b	20B	79%

Even 80-106B models maxed out around 88% without fine-tuning. The ceiling wasn’t as high as we expected, and DistilBERT was already beating them.

With baselines established, we started fine-tuning and quickly learned that the path to 93% accuracy wasn’t straight.

Experiment 1: Topic + Subtopic Classification

We started by trying to do both topic and subtopic classification in one pass.

The prompt:

System: "Classify the topic and subtopic. Provide JSON with fields: topic, subtopic."
User: <query>
Assistant: {"topic"

We thought that fine-tuning would teach the model to map inputs to 7 topics and 56 subtopics, just like any ML classifier learns decision boundaries.

What happened instead was a drop in accuracy across all models. The 56-class problem was too complex; models confused similar subtopics constantly. History vs Culture, Economics vs Business, Science vs Technology boundaries were chaos. We started with 500 datapoints, realized that was much too low, then scaled to 2k data points. However, 56 classes meant ~35 samples each, so still not enough signal. We needed to simplify.

Experiment 2: Simplify to Topic-Only

Dropping subtopics immediately helped. With the same 2k dataset and 7 classes instead of 56 we achieved the following results:

Model	Accuracy Topic + Subtopic	Accuracy Topic
Qwen3-0.6B	46.9%	52.1% (+5.2%)
DistilBERT	43.3%	57.4% (+14.1%)

With topic-only classification working, we scaled up to 8k samples. Model size scaling showed diminishing returns past 4B: moving from 0.6B→1.7B gained +21%, and 1.7B→4B gained +24% (the inflection point), but 4B→14B only added +7%. More strikingly, fine-tuned 14B beat the off-the-shelf 80B base model by 6%.

Why smaller models fail: We tested Qwen3-1.7B and saw a characteristic pattern: very high precision (65%) but low recall (49%). The model becomes ultra-conservative: it achieves 93% recall on Technology (over-predicting the majority class) while minority classes like Personal Development collapse to 14% recall. Below ~4B parameters, models lack the capacity to learn nuanced category boundaries.

What we learned:

Good to restate: start simple, iterate up. Don’t try to solve the hardest version of your problem first.

Our tests were done with a fixed LoRA config, which made 4B the minimum viable size for this task complexity; smaller models fall back to majority-class predictions. With different LoRA configs which touch more weights during fine-tuning, we likely could get similar performance with smaller models.

XML vs JSON: We tested both output formats. XML had similar accuracy but cost ~10% more tokens. JSON won.

Experiment 3: The Prompt Engineering Insight

This is where things got interesting. We iterated on three prompt versions:

V1 (Base):

System: "Classify the topic of the following user query.
Provide your response as JSON with field: topic."
User: <query>

V2 (With Topic List):

System: "Classify the topic. Valid topics:
- Technology and programming
- Science
- Arts and entertainment
- Economics and business
- Personal development
- History and culture
- Other

Provide your response as JSON with field: topic."
User: <

V3 (Topics + Reasoning):

System: [Same as V2, plus:]
"Analyze the query carefully and provide your reasoning before classification.
Provide your response as JSON with fields: reasoning, topic."
User: <query>

The results:

Transition Prompt Versions	Accuracy Gain
V1 → V2	+26% (60.4% → 85%)
V2 → V3	+8%
Total	+34%

Performance gains for Qwen3-14B throughout the prompt versions.

Prompt Version Performance for fine-tuned models

The reasoning prompt rescued struggling classes. On Qwen3-4B, the “Other” category went from 0% F1 (complete failure) to 71% F1 with V3. Science and Arts recall jumped 27-29 percentage points. The reasoning step forces the model to articulate why before committing to a classification, particularly valuable for ambiguous cases.

This was our biggest learning: prompt engineering delivered gains comparable to 5-10x model scaling. Don’t assume the model will learn all categories based on data; spell them out, and make the model show its work. Especially with LoRA, where you are not touching most of the model, these LLM best practices hold.

The Final Push: Scaling Up

With 8,000 balanced examples and the V3 prompt, our fine-tuned models hit their stride:

Model	Accuracy	F1 (macro)	Balanced Acc
Qwen3-14B (FT)	93.42%	90.75%	90.28%
GPT-4.1-nano (FT)	93.34%	92.44%	93.02%
DistilBERT	92.43%	92.63%	93.32%
Qwen3-4B (FT)	86.40%	81.66%	82.37%

Even our best model had weak spots. The confusion matrix reveals Personal Development (79% F1) struggles because queries about “career planning” blur with Economics. For Personal Development specifically, Gemini and Claude agreed only 43.8% of the time, far below the 77.8% overall agreement rate. The “Other” catch-all also underperforms (83% F1) as models prefer confident specific predictions.

Qwen3-14B Confusion Matrix

Fine-Tuning Journey: From BERT Baseline to 91% F1

These results didn’t come easily and the data behind them required its own engineering effort.

The Data Challenge

Good agentic datasets are rare. We used the Toucan 1.5M dataset, a collection of synthetic traces generated by running prompts through Kimi K2, GPT-OSS-120B, and Qwen3-32B with various MCP server combinations. With 1.5M traces available and fine-tuning typically requiring 5-10k examples, we had plenty to work with.

We classified only the first user message (not full conversations) because first queries are ~50x shorter (median 62 vs 3,457 tokens), making them compatible with BERT’s 512-token limit while keeping classification consistent across architectures.

Token Distribution: First Query vs Full Conversation

The Labeling Problem

Human labeling 8k+ samples wasn’t feasible, so we used dual-LLM labeling: Gemini 2.5 Pro and Claude Sonnet 4.5 independently labeled each sample.

Why two models? They’re “differently opinionated.” Sonnet is more conservative (uses “Other” 2.8x more often overall, and 46.8x more often when the models disagree), while Gemini assigns specific categories more confidently. We only kept samples where both models agreed: 77.8% agreement rate (Cohen’s Kappa: 0.72, substantial agreement).

To understand the labeling behaviour of models, it’s interesting to look at where they differ the most in their classifications.

Pattern	Count	Notes
Science → Other (Gemini → Sonnet)	574	Sonnet more conservative
Economics → Other	259
History → Other	237
Technology → Economics	209	Category boundary confusion

Gemini vs Claude Agreement

Labeling costs:

Model	Cost	Cost/1k samples
Gemini 2.5 Pro	$4.53	$0.45
Claude Sonnet 4.5	$21.63	$2.17
Total	$26.16	$2.62

Why the cost difference? Neither model was prompted to reason; both were asked to output only JSON classification. Gemini complied with minimal output (~12 tokens/sample). Claude, lacking native structured output at the time (November 2024), included brief chain-of-thought reasoning before the JSON (~89 tokens/sample average). This reasoning was stripped during post-processing, but the tokens were still billed.

At $2.62/1k samples for labeling vs $0.135-$0.35/1k for fine-tuned inference, the economics strongly favor fine-tuning for high-volume classification—fine-tuned models are 7-19x cheaper per inference than the dual-model labeling cost.

The Imbalance Problem

The Toucan dataset skews heavily toward tool-use interactions, meaning Technology and Programming dominated (40%+ after labeling). Personal Development was just 1.8%.

The dataset’s MCP servers aren’t uniformly distributed: progressing sequentially shifts you between domains (weather tools → finance tools), creating sampling bias. We tried sampling by MCP server category first, but this actually made label imbalance worse.

Final solution: aggressive up/down-sampling to reduce max imbalance from 23:1 to 3.8:1. Not perfect, but workable. We kept the validation set unbalanced to measure real-world performance.

The limitation of upsampling: Starting at 1.8% (Personal Development), even 8x duplication only reaches ~15% representation. Models continue to struggle with minority classes despite our best balancing efforts, as seen in Personal Development’s persistently lower F1 scores across all models.

Topic Distribution Before/After

With data in hand, we turned to the practical question: which platform should you actually use for fine-tuning and deployment?

Platform Considerations

Together.ai vs OpenAI

Metric	Together.ai (Qwen3-14B)	OpenAI (GPT-4.1-nano)
Duration	28 min	3 hrs
Training cost	$19.81	$48.00
Inference cost	$0.40/1k (dedicated)	$0.135/1k (serverless)
Deployment	Dedicated endpoint (manual)	Serverless (instant)
Control	Full (LoRA rank, weights)	Limited (epochs, batch, LR)

Together.ai charges per billable token (~$0.55/M), not compute time. This means model size barely affects training cost: we paid the same to fine-tune 4B and 14B on identical datasets. The savings are in inference, not training.

When to choose OpenAI: Serverless deployment without GPU management, moderate inference volume (<1M/month), or simplest path to production. GPT-4.1-nano matched accuracy (93.3% vs 93.4%) with better F1 (92.4% vs 90.8%), and inference is 3x cheaper than a dedicated endpoint.

When to choose Together.ai: Full control over training (LoRA rank, adapter weights), faster iteration (6x faster training), or plans to self-host.

Training Cost vs Model Size

Inference Costs: Where Model Size Matters

Unlike training, inference costs scale significantly with model size. Here’s where the 4B sweet spot becomes clear:

Throughput, latency, and cost scale predictably with model size. 4B offers the best balance: 2.1x faster and 2x cheaper than 14B while achieving 86% accuracy.

Reasoning prompts are expensive: V3 prompts (with reasoning) account for 77% of total inference cost despite having the same number of samples. Why? Output token explosion—reasoning prompts increased output from 10-40 tokens (V1) to 95-358 tokens (V3), a 2-36x increase depending on model. See Appendix D for the full breakdown.

Key insight: Prompt version matters more than model size for latency; output tokens dominate response time, not input tokens. V3’s reasoning field can offset the speed gains of using a smaller model.

Throughput comparison: On V1 prompts, 0.6B achieves 56.5 req/s vs 11.8 req/s for 14B, a 5x difference. But with V3 reasoning prompts, both slow dramatically: 0.6B drops to 9.7 req/s and 14B to 3.1 req/s.

Reliability at Scale

Expect failures with reasoning prompts. When we hit our dedicated endpoints with 50 concurrent async requests using V3 prompts, both 4B and 14B started dropping requests. The 14B showed 96.6% success rate (45 failures out of 1,307) due to long responses triggering timeouts.

Lesson: Implement retry logic with exponential backoff. Reasoning prompts generate unpredictably long outputs. Budget for 2-3 retries per request in production.

Serverless vs Fine-Tuned: The Cost-Accuracy Trade-off

How does fine-tuning compare to just using larger serverless base models?

Cost vs Accuracy Trade-off

The fine-tuned 14B dominates the top-right quadrant (high accuracy, moderate cost). It achieves 93.4% accuracy at $0.40/1k samples, beating the 106B GLM model (88%) that costs half as much but sacrifices 5+ points of accuracy. The fine-tuned 4B offers an interesting middle ground at 86.4% accuracy for just $0.19/1k samples. Meanwhile, the 80B Qwen3-Next costs $0.57/1k for only 87.4% accuracy, demonstrating that raw parameter count doesn’t guarantee performance. The real killer here though, is GPT-4.1-nano, delivering equal performance to Qwen3-14B, but doing it much cheaper.

Takeaway**:** For serverless base models, GLM-4.5-Air-FP8 offers the best cost-accuracy balance. But fine-tuned models win overall: GPT-4.1-nano for serverless simplicity ($0.135/1k, 93.3%), or Qwen3-14B/4B on dedicated endpoints for maximum control.

Note: These costs are for unquantized models on dedicated endpoints. Quantization (e.g., INT8 or INT4) could significantly reduce inference costs while maintaining most of the accuracy. This is a promising direction for further optimization.

Structured Output + Reasoning Models add challenge

Reasoning models (Qwen3-Next, GLM-4.5) are trained to output <reasoning>...</reasoning> tags. But structured output forces JSON. The conflict manifests as:

Models inject XML into JSON: {"reasoning": "<reasoning>...</reasoning>"}

Or have XML before JSON: <reasoning>...</reasoning>{"reasoning": ""}. This happened especially in json_mode, rather than json_schema, where it does not force the model to output the correct structure.

V3’s explicit reasoning field solved this by giving models a sanctioned place to think within the JSON schema, and models adhered surprisingly well. The reasoning traces were the ones from Sonnet 4.5.

The Answer

So to the question: “Could a well-tuned small model match, or beat, models 10x its size?” - Yes, with caveats. Our fine-tuned 14B matched DistilBERT’s accuracy and beat off-the-shelf 80B+ models by 5+ percentage points. The 4B came surprisingly close at half the inference cost.

But this only works for fixed categories. Our actual production need is dynamic classification (user-defined categories that evolve), which this approach can’t handle without retraining. This research validates the fixed-category baseline: when categories stabilize, we know fine-tuning works.

When to Fine-Tune (Checklist)

Fine-tune when:

You have 5k+ labeled examples (ideally 500+ per class)

Categories are stable and won’t change frequently

You need consistent output formatting

Latency is critical (<100ms per request)

You’re processing high volume (cost amortization)

Skip fine-tuning when:

Few-shot prompting already achieves >85% accuracy

Dataset is <2k samples or categories change frequently

You need to handle arbitrary/dynamic categories

DistilBERT vs Fine-Tuned LLMs

DistilBERT deserves special mention. Despite being 60-200x smaller, it matched our best fine-tuned model on balanced metrics—see the Final Push comparison above. DistilBERT actually achieved better macro F1 (92.63% vs 90.75%) and balanced accuracy (93.32% vs 90.28%).

The trade-off: DistilBERT has a 512-token input limit. Our first-message-only approach worked, but if you need to classify longer texts, LLMs are your only option.

Practical Recommendations

Try prompt engineering before scaling up. It delivered our largest accuracy gains 1.

Use 4B for cost-efficiency, 14B for max accuracy. Training cost is the same; pick based on your inference cost trade-off 1.

Start with fewer classes. Our 7-class classification worked; 56-class failed 1.

Data quantity matters. Aim for 500+ samples per class minimum 1.

Consider dual-LLM labeling for cost-effective dataset creation while reducing bias. It should not replace humans, but it’s better than 1 LLM. 1.

Test structured output early. Reasoning models can conflict with JSON schemas 1.

Budget for reasoning tokens. They significantly increase inference costs, but lead to higher performance. 1.

Budget for dual-LLM labeling. It’s cheap and effective

Future Research

Smaller models: Can 1.7B or 0.6B reach 85%+ with more training data?

Hierarchical classification: Predict topic first, then subtopic conditioned on topic

Dynamic categories: Embedding + clustering instead of supervised fine-tuning

Confidence thresholding: Route low-confidence predictions to human review

Evaluate cheaper serverless options: Benchmark Gemini 2.5 Flash ($0.30/$2.50 per 1M tokens) and Claude Haiku 4.5 ($1.00/$5.00 per 1M tokens) to understand their cost-accuracy trade-off compared to the fine-tuned models and serverless base models we tested.

Questions or want to discuss? Reach out to the Orq research team.

Appendix A: Fine-Tuned Model Results

Model	Prompt	Samples Eval	Accuracy	F1 (macro)	Balanced Acc	Precision	Recall
Qwen3-14B	V3	1,155	93.42%	90.75%	90.28%	91.32%	90.28%
GPT-4.1-nano	V3	1,307	93.34%	92.44%	93.02%	91.99%	93.02%
DistilBERT	-	1,307	92.43%	92.63%	93.32%	92.08%	93.32%
Qwen3-4B	V3	1,147	86.40%	81.66%	82.37%	81.44%	82.37%
Qwen3-14B	V2	1,154	85.62%	81.35%	80.73%	86.38%	80.73%
Qwen3-4B	V2	1,155	77.40%	71.97%	71.32%	75.73%	71.32%
Qwen3-1.7B	V1	-	62.28%	49.03%	49.15%	65.05%	49.15%
Qwen3-14B	V1	973	59.30%	52.41%	51.48%	65.87%	51.48%
Qwen3-4B	V1	100	58.00%	47.44%	54.60%	47.98%	54.60%
DistilBERT	2k	996	56.22%	46.67%	50.77%	45.95%	50.77%

Appendix B: Together.ai Pricing Model

Model Size	Cost/M Billable Tokens	Hardware
0.6B - 14B	~$0.55/M	1x H100 80GB
32B+	~$1.65/M	2x H100 80GB

Key Finding: Cost per billable token is flat (~$0.55/M) regardless of model size from 0.6B to 14B. Model size does NOT affect cost as long as it fits on the same number of GPUs.

Cost Estimation Formula:

estimated_cost = base_tokens × epochs × $0.55 / 1,000,000

Example: 350K base tokens × 10 epochs = 3.5M billable tokens × $0.55 = $19.25

Appendix C: Topic Distribution (Original vs Balanced)

Topic	Original %	Balanced %	Train	Val
Technology and programming	40%+	~17%	~1,100	309
Economics and business	~15%	~17%	~1,100	304
Science	~12%	~14%	~900	163
Arts and entertainment	~10%	~12%	~750	132
History and culture	~8%	~9%	~550	95
Other	~7%	~9%	~550	100
Personal development	1.8%	~7%	~450	52

Imbalance ratio: 23:1 (original) → 3.8:1 (balanced)

Token Statistics

Metric	First Query	Full Conversation
Median tokens	62	3,457
Ratio	1x	~50x longer

We spent weeks fine-tuning 8+ language models on a text classification task, from tiny 0.6B models to 14B behemoths. The question:

Could a well-tuned small model match, or beat, models 10x its size?

The answer surprised us, and the lessons learned apply far beyond our specific use case. While we do our best, this is not an academic paper, but rather a practical, empirical account of what we tried, what failed, and what you can apply to your own fine-tuning projects.

Glossary

This post assumes familiarity with ML fundamentals (training/validation splits, classification metrics) and basic LLM concepts. Here’s a quick glossary:

Term	Definition
Parameters (4B, 14B)	The number of learnable weights in a model that roughly correlates with capability and cost
Fine-tuning	Training an existing model on task-specific data to improve performance on that task
LoRA	Low-Rank Adaptation, which trains only 1-5% of model weights, dramatically reducing memory and compute requirements
Prompt engineering	Designing input text/instructions to improve model output without changing model weights

The Business Need

At Orq.ai, we process thousands of conversational traces daily. Understanding what users are discussing (technology questions, business inquiries, creative requests) can give valuable insights to clients. Manual classification doesn’t scale. We needed automated topic classification that’s fast, accurate, and cost-effective.

The Technical Challenge

Text classification sounds simple until you try it. We started with 7 main categories (Technology, Science, Arts, Economics, Personal Development, History, Other) and initially attempted 56 subtopics. The boundaries are fuzzy: is “AI ethics” Technology, Science, or Personal Development? Is “startup funding” Economics or Technology?

Our Goal

Could we fine-tune a 4B or 14B parameter model to beat larger base models? If so, we’d get faster inference, lower costs, and the ability to self-host. The prize: production-quality classification at a fraction of the cost.

The Baseline: What We Were Trying to Beat

We chose the Qwen3 model family for a specific reason: it offers a wide range of sizes (0.6B to 235B) within the same architecture. This let us isolate the effect of model scaling without confounding variables like different tokenizers or training approaches.

Our fine-tuning setup:

Method: LoRA (Low-Rank Adaptation), which trains only 1-5% of model weights

Configuration: Rank 16, alpha 8, learning rate 0.0002

Platform: Together.ai for most runs, OpenAI for comparison

DistilBERT as Floor

Every ML project needs a baseline. DistilBERT (66M parameters) is the classic choice for text classification: small, fast, well-understood. On our 8k balanced dataset, it achieved 92.43% accuracy with 92.63% macro F1.

Why so high? DistilBERT trains all its weights during fine-tuning, not just 1-5% like LoRA. Its encoder architecture is also optimized for understanding tasks like classification. This set a surprisingly high bar: any fine-tuned LLM would need to match a model 60-200x smaller.

Large Base Models as Ceiling

Model	Parameters	Accuracy
GLM-4.5-Air-FP8	106B	88%
Qwen3-Next-80B	80B	87%
gpt-oss-20b	20B	79%

Even 80-106B models maxed out around 88% without fine-tuning. The ceiling wasn’t as high as we expected, and DistilBERT was already beating them.

With baselines established, we started fine-tuning and quickly learned that the path to 93% accuracy wasn’t straight.

Experiment 1: Topic + Subtopic Classification

We started by trying to do both topic and subtopic classification in one pass.

The prompt:

System: "Classify the topic and subtopic. Provide JSON with fields: topic, subtopic."
User: <query>
Assistant: {"topic"

We thought that fine-tuning would teach the model to map inputs to 7 topics and 56 subtopics, just like any ML classifier learns decision boundaries.

What happened instead was a drop in accuracy across all models. The 56-class problem was too complex; models confused similar subtopics constantly. History vs Culture, Economics vs Business, Science vs Technology boundaries were chaos. We started with 500 datapoints, realized that was much too low, then scaled to 2k data points. However, 56 classes meant ~35 samples each, so still not enough signal. We needed to simplify.

Experiment 2: Simplify to Topic-Only

Dropping subtopics immediately helped. With the same 2k dataset and 7 classes instead of 56 we achieved the following results:

Model	Accuracy Topic + Subtopic	Accuracy Topic
Qwen3-0.6B	46.9%	52.1% (+5.2%)
DistilBERT	43.3%	57.4% (+14.1%)

With topic-only classification working, we scaled up to 8k samples. Model size scaling showed diminishing returns past 4B: moving from 0.6B→1.7B gained +21%, and 1.7B→4B gained +24% (the inflection point), but 4B→14B only added +7%. More strikingly, fine-tuned 14B beat the off-the-shelf 80B base model by 6%.

Why smaller models fail: We tested Qwen3-1.7B and saw a characteristic pattern: very high precision (65%) but low recall (49%). The model becomes ultra-conservative: it achieves 93% recall on Technology (over-predicting the majority class) while minority classes like Personal Development collapse to 14% recall. Below ~4B parameters, models lack the capacity to learn nuanced category boundaries.

What we learned:

Good to restate: start simple, iterate up. Don’t try to solve the hardest version of your problem first.

Our tests were done with a fixed LoRA config, which made 4B the minimum viable size for this task complexity; smaller models fall back to majority-class predictions. With different LoRA configs which touch more weights during fine-tuning, we likely could get similar performance with smaller models.

XML vs JSON: We tested both output formats. XML had similar accuracy but cost ~10% more tokens. JSON won.

Experiment 3: The Prompt Engineering Insight

This is where things got interesting. We iterated on three prompt versions:

V1 (Base):

System: "Classify the topic of the following user query.
Provide your response as JSON with field: topic."
User: <query>

V2 (With Topic List):

System: "Classify the topic. Valid topics:
- Technology and programming
- Science
- Arts and entertainment
- Economics and business
- Personal development
- History and culture
- Other

Provide your response as JSON with field: topic."
User: <

V3 (Topics + Reasoning):

System: [Same as V2, plus:]
"Analyze the query carefully and provide your reasoning before classification.
Provide your response as JSON with fields: reasoning, topic."
User: <query>

The results:

Transition Prompt Versions	Accuracy Gain
V1 → V2	+26% (60.4% → 85%)
V2 → V3	+8%
Total	+34%

Performance gains for Qwen3-14B throughout the prompt versions.

Prompt Version Performance for fine-tuned models

The reasoning prompt rescued struggling classes. On Qwen3-4B, the “Other” category went from 0% F1 (complete failure) to 71% F1 with V3. Science and Arts recall jumped 27-29 percentage points. The reasoning step forces the model to articulate why before committing to a classification, particularly valuable for ambiguous cases.

This was our biggest learning: prompt engineering delivered gains comparable to 5-10x model scaling. Don’t assume the model will learn all categories based on data; spell them out, and make the model show its work. Especially with LoRA, where you are not touching most of the model, these LLM best practices hold.

The Final Push: Scaling Up

With 8,000 balanced examples and the V3 prompt, our fine-tuned models hit their stride:

Model	Accuracy	F1 (macro)	Balanced Acc
Qwen3-14B (FT)	93.42%	90.75%	90.28%
GPT-4.1-nano (FT)	93.34%	92.44%	93.02%
DistilBERT	92.43%	92.63%	93.32%
Qwen3-4B (FT)	86.40%	81.66%	82.37%

Even our best model had weak spots. The confusion matrix reveals Personal Development (79% F1) struggles because queries about “career planning” blur with Economics. For Personal Development specifically, Gemini and Claude agreed only 43.8% of the time, far below the 77.8% overall agreement rate. The “Other” catch-all also underperforms (83% F1) as models prefer confident specific predictions.

Qwen3-14B Confusion Matrix

Fine-Tuning Journey: From BERT Baseline to 91% F1

These results didn’t come easily and the data behind them required its own engineering effort.

The Data Challenge

Good agentic datasets are rare. We used the Toucan 1.5M dataset, a collection of synthetic traces generated by running prompts through Kimi K2, GPT-OSS-120B, and Qwen3-32B with various MCP server combinations. With 1.5M traces available and fine-tuning typically requiring 5-10k examples, we had plenty to work with.

We classified only the first user message (not full conversations) because first queries are ~50x shorter (median 62 vs 3,457 tokens), making them compatible with BERT’s 512-token limit while keeping classification consistent across architectures.

Token Distribution: First Query vs Full Conversation

The Labeling Problem

Human labeling 8k+ samples wasn’t feasible, so we used dual-LLM labeling: Gemini 2.5 Pro and Claude Sonnet 4.5 independently labeled each sample.

Why two models? They’re “differently opinionated.” Sonnet is more conservative (uses “Other” 2.8x more often overall, and 46.8x more often when the models disagree), while Gemini assigns specific categories more confidently. We only kept samples where both models agreed: 77.8% agreement rate (Cohen’s Kappa: 0.72, substantial agreement).

To understand the labeling behaviour of models, it’s interesting to look at where they differ the most in their classifications.

Pattern	Count	Notes
Science → Other (Gemini → Sonnet)	574	Sonnet more conservative
Economics → Other	259
History → Other	237
Technology → Economics	209	Category boundary confusion

Gemini vs Claude Agreement

Labeling costs:

Model	Cost	Cost/1k samples
Gemini 2.5 Pro	$4.53	$0.45
Claude Sonnet 4.5	$21.63	$2.17
Total	$26.16	$2.62

Why the cost difference? Neither model was prompted to reason; both were asked to output only JSON classification. Gemini complied with minimal output (~12 tokens/sample). Claude, lacking native structured output at the time (November 2024), included brief chain-of-thought reasoning before the JSON (~89 tokens/sample average). This reasoning was stripped during post-processing, but the tokens were still billed.

At $2.62/1k samples for labeling vs $0.135-$0.35/1k for fine-tuned inference, the economics strongly favor fine-tuning for high-volume classification—fine-tuned models are 7-19x cheaper per inference than the dual-model labeling cost.

The Imbalance Problem

The Toucan dataset skews heavily toward tool-use interactions, meaning Technology and Programming dominated (40%+ after labeling). Personal Development was just 1.8%.

The dataset’s MCP servers aren’t uniformly distributed: progressing sequentially shifts you between domains (weather tools → finance tools), creating sampling bias. We tried sampling by MCP server category first, but this actually made label imbalance worse.

Final solution: aggressive up/down-sampling to reduce max imbalance from 23:1 to 3.8:1. Not perfect, but workable. We kept the validation set unbalanced to measure real-world performance.

The limitation of upsampling: Starting at 1.8% (Personal Development), even 8x duplication only reaches ~15% representation. Models continue to struggle with minority classes despite our best balancing efforts, as seen in Personal Development’s persistently lower F1 scores across all models.

Topic Distribution Before/After

With data in hand, we turned to the practical question: which platform should you actually use for fine-tuning and deployment?

Platform Considerations

Together.ai vs OpenAI

Metric	Together.ai (Qwen3-14B)	OpenAI (GPT-4.1-nano)
Duration	28 min	3 hrs
Training cost	$19.81	$48.00
Inference cost	$0.40/1k (dedicated)	$0.135/1k (serverless)
Deployment	Dedicated endpoint (manual)	Serverless (instant)
Control	Full (LoRA rank, weights)	Limited (epochs, batch, LR)

Together.ai charges per billable token (~$0.55/M), not compute time. This means model size barely affects training cost: we paid the same to fine-tune 4B and 14B on identical datasets. The savings are in inference, not training.

When to choose OpenAI: Serverless deployment without GPU management, moderate inference volume (<1M/month), or simplest path to production. GPT-4.1-nano matched accuracy (93.3% vs 93.4%) with better F1 (92.4% vs 90.8%), and inference is 3x cheaper than a dedicated endpoint.

When to choose Together.ai: Full control over training (LoRA rank, adapter weights), faster iteration (6x faster training), or plans to self-host.

Training Cost vs Model Size

Inference Costs: Where Model Size Matters

Unlike training, inference costs scale significantly with model size. Here’s where the 4B sweet spot becomes clear:

Throughput, latency, and cost scale predictably with model size. 4B offers the best balance: 2.1x faster and 2x cheaper than 14B while achieving 86% accuracy.

Reasoning prompts are expensive: V3 prompts (with reasoning) account for 77% of total inference cost despite having the same number of samples. Why? Output token explosion—reasoning prompts increased output from 10-40 tokens (V1) to 95-358 tokens (V3), a 2-36x increase depending on model. See Appendix D for the full breakdown.

Key insight: Prompt version matters more than model size for latency; output tokens dominate response time, not input tokens. V3’s reasoning field can offset the speed gains of using a smaller model.

Throughput comparison: On V1 prompts, 0.6B achieves 56.5 req/s vs 11.8 req/s for 14B, a 5x difference. But with V3 reasoning prompts, both slow dramatically: 0.6B drops to 9.7 req/s and 14B to 3.1 req/s.

Reliability at Scale

Expect failures with reasoning prompts. When we hit our dedicated endpoints with 50 concurrent async requests using V3 prompts, both 4B and 14B started dropping requests. The 14B showed 96.6% success rate (45 failures out of 1,307) due to long responses triggering timeouts.

Lesson: Implement retry logic with exponential backoff. Reasoning prompts generate unpredictably long outputs. Budget for 2-3 retries per request in production.

Serverless vs Fine-Tuned: The Cost-Accuracy Trade-off

How does fine-tuning compare to just using larger serverless base models?

Cost vs Accuracy Trade-off

The fine-tuned 14B dominates the top-right quadrant (high accuracy, moderate cost). It achieves 93.4% accuracy at $0.40/1k samples, beating the 106B GLM model (88%) that costs half as much but sacrifices 5+ points of accuracy. The fine-tuned 4B offers an interesting middle ground at 86.4% accuracy for just $0.19/1k samples. Meanwhile, the 80B Qwen3-Next costs $0.57/1k for only 87.4% accuracy, demonstrating that raw parameter count doesn’t guarantee performance. The real killer here though, is GPT-4.1-nano, delivering equal performance to Qwen3-14B, but doing it much cheaper.

Takeaway**:** For serverless base models, GLM-4.5-Air-FP8 offers the best cost-accuracy balance. But fine-tuned models win overall: GPT-4.1-nano for serverless simplicity ($0.135/1k, 93.3%), or Qwen3-14B/4B on dedicated endpoints for maximum control.

Note: These costs are for unquantized models on dedicated endpoints. Quantization (e.g., INT8 or INT4) could significantly reduce inference costs while maintaining most of the accuracy. This is a promising direction for further optimization.

Structured Output + Reasoning Models add challenge

Reasoning models (Qwen3-Next, GLM-4.5) are trained to output <reasoning>...</reasoning> tags. But structured output forces JSON. The conflict manifests as:

Models inject XML into JSON: {"reasoning": "<reasoning>...</reasoning>"}

Or have XML before JSON: <reasoning>...</reasoning>{"reasoning": ""}. This happened especially in json_mode, rather than json_schema, where it does not force the model to output the correct structure.

V3’s explicit reasoning field solved this by giving models a sanctioned place to think within the JSON schema, and models adhered surprisingly well. The reasoning traces were the ones from Sonnet 4.5.

The Answer

So to the question: “Could a well-tuned small model match, or beat, models 10x its size?” - Yes, with caveats. Our fine-tuned 14B matched DistilBERT’s accuracy and beat off-the-shelf 80B+ models by 5+ percentage points. The 4B came surprisingly close at half the inference cost.

But this only works for fixed categories. Our actual production need is dynamic classification (user-defined categories that evolve), which this approach can’t handle without retraining. This research validates the fixed-category baseline: when categories stabilize, we know fine-tuning works.

When to Fine-Tune (Checklist)

Fine-tune when:

You have 5k+ labeled examples (ideally 500+ per class)

Categories are stable and won’t change frequently

You need consistent output formatting

Latency is critical (<100ms per request)

You’re processing high volume (cost amortization)

Skip fine-tuning when:

Few-shot prompting already achieves >85% accuracy

Dataset is <2k samples or categories change frequently

You need to handle arbitrary/dynamic categories

DistilBERT vs Fine-Tuned LLMs

DistilBERT deserves special mention. Despite being 60-200x smaller, it matched our best fine-tuned model on balanced metrics—see the Final Push comparison above. DistilBERT actually achieved better macro F1 (92.63% vs 90.75%) and balanced accuracy (93.32% vs 90.28%).

The trade-off: DistilBERT has a 512-token input limit. Our first-message-only approach worked, but if you need to classify longer texts, LLMs are your only option.

Practical Recommendations

Try prompt engineering before scaling up. It delivered our largest accuracy gains 1.

Use 4B for cost-efficiency, 14B for max accuracy. Training cost is the same; pick based on your inference cost trade-off 1.

Start with fewer classes. Our 7-class classification worked; 56-class failed 1.

Data quantity matters. Aim for 500+ samples per class minimum 1.

Consider dual-LLM labeling for cost-effective dataset creation while reducing bias. It should not replace humans, but it’s better than 1 LLM. 1.

Test structured output early. Reasoning models can conflict with JSON schemas 1.

Budget for reasoning tokens. They significantly increase inference costs, but lead to higher performance. 1.

Budget for dual-LLM labeling. It’s cheap and effective

Future Research

Smaller models: Can 1.7B or 0.6B reach 85%+ with more training data?

Hierarchical classification: Predict topic first, then subtopic conditioned on topic

Dynamic categories: Embedding + clustering instead of supervised fine-tuning

Confidence thresholding: Route low-confidence predictions to human review

Evaluate cheaper serverless options: Benchmark Gemini 2.5 Flash ($0.30/$2.50 per 1M tokens) and Claude Haiku 4.5 ($1.00/$5.00 per 1M tokens) to understand their cost-accuracy trade-off compared to the fine-tuned models and serverless base models we tested.

Questions or want to discuss? Reach out to the Orq research team.

Appendix A: Fine-Tuned Model Results

Model	Prompt	Samples Eval	Accuracy	F1 (macro)	Balanced Acc	Precision	Recall
Qwen3-14B	V3	1,155	93.42%	90.75%	90.28%	91.32%	90.28%
GPT-4.1-nano	V3	1,307	93.34%	92.44%	93.02%	91.99%	93.02%
DistilBERT	-	1,307	92.43%	92.63%	93.32%	92.08%	93.32%
Qwen3-4B	V3	1,147	86.40%	81.66%	82.37%	81.44%	82.37%
Qwen3-14B	V2	1,154	85.62%	81.35%	80.73%	86.38%	80.73%
Qwen3-4B	V2	1,155	77.40%	71.97%	71.32%	75.73%	71.32%
Qwen3-1.7B	V1	-	62.28%	49.03%	49.15%	65.05%	49.15%
Qwen3-14B	V1	973	59.30%	52.41%	51.48%	65.87%	51.48%
Qwen3-4B	V1	100	58.00%	47.44%	54.60%	47.98%	54.60%
DistilBERT	2k	996	56.22%	46.67%	50.77%	45.95%	50.77%

Appendix B: Together.ai Pricing Model

Model Size	Cost/M Billable Tokens	Hardware
0.6B - 14B	~$0.55/M	1x H100 80GB
32B+	~$1.65/M	2x H100 80GB

Key Finding: Cost per billable token is flat (~$0.55/M) regardless of model size from 0.6B to 14B. Model size does NOT affect cost as long as it fits on the same number of GPUs.

Cost Estimation Formula:

estimated_cost = base_tokens × epochs × $0.55 / 1,000,000

Example: 350K base tokens × 10 epochs = 3.5M billable tokens × $0.55 = $19.25

Appendix C: Topic Distribution (Original vs Balanced)

Topic	Original %	Balanced %	Train	Val
Technology and programming	40%+	~17%	~1,100	309
Economics and business	~15%	~17%	~1,100	304
Science	~12%	~14%	~900	163
Arts and entertainment	~10%	~12%	~750	132
History and culture	~8%	~9%	~550	95
Other	~7%	~9%	~550	100
Personal development	1.8%	~7%	~450	52

Imbalance ratio: 23:1 (original) → 3.8:1 (balanced)

Token Statistics

Metric	First Query	Full Conversation
Median tokens	62	3,457
Ratio	1x	~50x longer

We spent weeks fine-tuning 8+ language models on a text classification task, from tiny 0.6B models to 14B behemoths. The question:

Could a well-tuned small model match, or beat, models 10x its size?

The answer surprised us, and the lessons learned apply far beyond our specific use case. While we do our best, this is not an academic paper, but rather a practical, empirical account of what we tried, what failed, and what you can apply to your own fine-tuning projects.

Glossary

This post assumes familiarity with ML fundamentals (training/validation splits, classification metrics) and basic LLM concepts. Here’s a quick glossary:

Term	Definition
Parameters (4B, 14B)	The number of learnable weights in a model that roughly correlates with capability and cost
Fine-tuning	Training an existing model on task-specific data to improve performance on that task
LoRA	Low-Rank Adaptation, which trains only 1-5% of model weights, dramatically reducing memory and compute requirements
Prompt engineering	Designing input text/instructions to improve model output without changing model weights

The Business Need

At Orq.ai, we process thousands of conversational traces daily. Understanding what users are discussing (technology questions, business inquiries, creative requests) can give valuable insights to clients. Manual classification doesn’t scale. We needed automated topic classification that’s fast, accurate, and cost-effective.

The Technical Challenge

Text classification sounds simple until you try it. We started with 7 main categories (Technology, Science, Arts, Economics, Personal Developme