Fine-Tuning vs RAG vs Prompting: A Decision Framework

Prompting alone is usually the fastest and cheapest way to start, and it is often sufficient for tasks that rely on general knowledge or straightforward instructions.

Retrieval-augmented generation is the right choice when answers need to be grounded in your own documents or data that changes frequently, since it avoids retraining and keeps the model current. Fine-tuning is worth the investment mainly when you need a consistent style, tone or specialised behaviour that prompting cannot reliably achieve.

In client engagements we default to prompting first, add retrieval when accuracy against internal data matters, and reserve fine-tuning for cases where the other two approaches have clearly hit their limits.