The article provides a comprehensive guide to evaluating Retrieval-Augmented Generation (RAG) applications, focusing on observability and evaluations to enhance data-driven decision-making. Using a sample application that answers questions about Langfuse documentation, the guide explains how to set up tracing with Langfuse to capture and analyze function calls, thereby enhancing visibility into the RAG pipeline. It details the process of evaluating RAG components, such as optimizing document chunk sizes to improve retrieval precision and context clarity. The guide further describes running experiments to determine the most effective chunking strategies and evaluating the relevance of retrieved document chunks through an LLM-as-a-Judge approach. Additionally, it emphasizes the importance of end-to-end evaluation to ensure that the complete RAG pipeline provides accurate and user-friendly answers by assessing answer correctness, faithfulness, groundedness, and relevance. The article advocates a systematic evaluation framework to optimize RAG applications and offers insights into actionable improvements based on average scores and individual example analyses, encouraging the application of this workflow to enhance RAG systems.