How Much Does It Cost to Build an AI-Powered Chatbot?

“Artificial intelligence is not just a tool for efficiency. It’s becoming a companion, understanding us in ways we never imagined.”
 Dr. Fei-Fei Li, co-director, Stanford’s Human-Centered AI Institute.

Some years ago, Gartner predicted that 80% of customer service would use generative AI to enhance client experience. That prediction was spot-on.

AI-powered customer service can take a business to a new level. Why? Because it offers 24/7 assistance. An assistance that never gets tired. From helping out with tasks, tackling FAQs, and giving a personal touch to enhance the support experience, chatbots, an extension of the all-encompassing AI technology, act as super-efficient team members.

If you are dwelling on the idea of using one, the question about its cost is likely to arise. After all, nothing great ever comes for free.

The price can depend on various things. So, there’s no single direct answer to this. However, we’ll provide you with everything that can impact the end cost of a chatbot for your business.

Turning Conversations Into Sales with AI: The Significance of AI Chatbots for Businesses

Ad Hoc Atelier is an Italian eCommerce store. Their website isn’t just another shopping site. It’s the marketplace that brings together Italy’s best artisan brands. Not just that, it also gives them a touch of personalization. The store also supports local craftsmanship. So, everything it offers is handmade and customizable.

Sounds like a great place to shop for unique items, right? However, the store sales indicated something completely different.

The company was shocked to find that 4 out of 5 carts were abandoned. This is way below the industry average. The genius minds at Ad Hoc Atelier quickly found all the reasons behind it. The major ones were long response times and drab emails. More important was one that the shoppers didn’t want to talk over phone calls.

But personalization is the company’s USP. And creating unique stuff for every shopper requires great relationship management with them.

The founders soon discovered a solution that could save the store from spiralling downward. They wanted something that would help them manage the customer conversations and encourage more people to complete their purchases.

Enter the Tidio chatbot.

The AI-powered solution helped them in numerous ways. It chatted with customers when they were ready to buy the product. The chatbot offered 24/7 support. This ensured that Ad Hoc Atelier didn’t miss a single sale.

The result?

Cart abandonment rate reduced from 83% to 73%. The store increased its conversion from 0.35% to 0.9%!

What Makes an AI Chatbot Different from a Regular Chatbot?

An AI chatbot’s price is higher than its non-AI version. This is mainly due to their advanced features. Regular chatbots follow pre-programmed rules. Their responses are restricted to predefined replies.

This is not the case with AI chatbots. They can:

• Use advanced technologies like NLP and ML.
• Can understand context and learn from chats. This allows them to enhance their responses over time.
• Give more personalized interactions.
• Excel in handling difficult queries. AI chatbots evolve with user preferences.

Whenever an AI chatbot interacts with a user, it’s like the bot is taking another class in the school of human interaction. It critiques itself and takes notes. The result? It returns the next day, smarter and more sophisticated.

What Influences an AI Chatbot’s Pricing?

An AI chatbot’s pricing depends on various factors. They include:

Your Business Goals

Your business goals are a key deciding factor in a chatbot’s price. So, it’s crucial to be fully clear about your needs. There’s no single chatbot that works for everyone. You must analyze what you exactly want.

For example, do you want a bot that answers user queries? In this case, an FAQ-centric chatbot can be useful. If your main goal is to generate leads, a lead generator bot will be better suited. For customer service, a customer support facilitator will work best.

All these chatbots have different prices. So, your business goals are the place where the price determination begins.

Complexity of Chatbot Functionalities

Gone are the days when chatbots answered just a fixed set of FAQs. AI-powered programs like Tidio chatbots have natural language processing technologies. These increase the complexity of these bots. For example, you can input the kind of images you want to generate. Voila! the bot will create exactly what you want.

The more functions your bot has, the costlier it will be. Generally, you can measure its complexity with these factors:

• How many user queries can it handle
• The level of customization
• The number of features it has
• Its capability to learn and adapt
• The accuracy and fluency of its responses

Functionalities You Need

An intuitive AI chatbot offers much more than basic features. They are tools that enhance your business’s efficiency. This happens because of the advanced functionalities that you can integrate into them. The chatbot price increases or decreases depending on how many features you integrate. To get the most out of the tool, the following functionalities are recommended:

a. Omni-Channel Capability

This allows the bot to offer a smooth integration across various platforms like WhatsApp, Facebook Messenger, etc.

b. Image Recognition

The chatbot can recognize an image that the user uploads. Then, it answer the questions about the image.

c. Speech Proficiency

It’s the ability of a chatbot to understand and reply to spoken language in human-like fluency and accuracy.

d. NLP Proficiency

NLP integration allows people to communicate with bots in a natural and human-like way. They mimic person-to-person dialogue.

Number of Users

The number of chatbot users directly impacts its pricing. A chatbot that handles a huge user base will cost more. The cost will also increase as you scale the program. Such a bot also requires you to have a robust IT infrastructure. So, there will also be much spending on that front.

Data Needs

AI chatbots work on the trained data. The complexity of the bot determines the cost to get, clean, and manage trained data. An e-commerce chatbot will rely on product brochures. A healthcare bot will need access to medical databases.

How much data you have affects the bot’s performance. There’s also the cost linked to the preparation of such data. To create an AI chatbot, you must have large datasets. They give the bot the skills to answer complex questions. If there’s a huge data to process, the bot can answer difficult questions. However, data analysis requires a lot of time and effort. This impacts chatbot pricing.

Below are approximate costs for chatbot data analysis:

• Simple data training: $3,000 – $6,000+
• Advanced ML and predictive analytics: $6,000 – $25,000+,
• Updates and maintenance: Recurring costs

 Integration with Current Systems

An AI chatbot’s price increases if you integrate it with your current systems. Suppose you link the bot to a service like Salesforce. For the chatbot to work well, it will need testing and customization. Besides, you must also consider the cost of compliance and security when integrating with other systems.

Development Team Expertise and Location

The team you hire and their location also affect the chatbot’s cost. Below is a quick estimation of the price around the globe.

• Developers in Western Europe and North America usually charge between $100 – $200 per hour.
• IT firms in Poland and Romania charge around $60 to $90 per hour.
• In countries like the Philippines and India, rates range from $20 to $50 per hour.

Maintenance and Updates

A chatbot’s maintenance and updates are an ongoing activity. They are crucial for the bot’s performance. These include fixing glitches and adding or enhancing features. Making the bot adapt to changing needs is also a part of it. All of it adds up to the overall cost.

You must ensure that you have set aside a part of your budget for these tasks. Continuous maintenance is needed for the bot to provide value to your customers and your business.

How Much Does a Custom AI Chatbot Cost?

Custom AI chatbots are tailored to your business needs. Depending on your requirements, they can be expensive or not. Generally, these tend to be on the pricier side. This is because of a high level of customization. There are two types of custom AI chatbots.

AI Chatbot Cost

AI chatbot pricing ranges between $100,000 – $200,000. The cost is mainly due to:

1. Machine learning algorithms in the bot. It allows it to assess huge amounts of conversations and interactions. Over time, the chatbot can offer more relevant replies.
2. These tools can handle a range of inquiries. They can even answer questions that require problem-solving.
3. You can integrate the bot with your CRM system. This lets it access and share relevant data during user interactions.

Generative AI Chatbots

Generative chatbot pricing is higher than custom bots. It begins at $200,000. This is because of:

1. They leverage advanced AI techniques. These are deep learning and natural language generation. This allows them to create and talk like humans.
2. These chatbots can engage in intricate dialogue. They can offer highly personalized responses.
3. Generative chatbots can engage in creative tasks, too. They can write marketing copy, poems, and code.

Microsoft Copilot is a generative AI chatbot. It lets you search for information and chat about anything. No matter what you ask, the bot will give a highly accurate reply. CoPilot has a notebook where it saves your questions to refer to later. It also has a fitness trainer, a cooking assistant, and a vacation planner!

What Is the Cost of an AI Chatbot With General Features?

It’s not easy to predict the cost of a chatbot without considering your specific business needs. However, below is a general estimation of a standard AI bot with regular features.

How to Reduce the Development Cost of an AI Chatbot

Chatbots can increase the efficiency of your business operations. This usually results in better sales and great customer experiences. But the chatbot price often scares most businesses from investing in one. Luckily, you don’t have to shell out a lot. Below are some of the best ways to cut development costs.

1. Use Chatbot Building Platforms

Building a chatbot from scratch isn’t just scary. It’s downright expensive. There are plenty of platforms designed to create chatbots. Use them to quickly develop your bot. You don’t need to code or worry about any technical aspects of development. These platforms rapidly create a bot and set it up for you. It’s a great option for businesses on a tight budget.

2. Outsource to a Custom Software Development Agency

Outsourcing allows you to gain access to global expertise. Startups in the US can outsource AI chatbot development to software firms in India. You’ll be surprised to see how great a product you receive at a fraction of the cost!

Contrarily, outsourcing to a firm in the US might guarantee you a decent bot. But you’ll have to spend a lot. Consider this. Developers in the US charge no less than $70 per hour. Indian developers offer the same product at an hourly rate of $25! The cost-cutting is massive.

Outsourcing also gives you flexibility with regard to scalability. You can hire a single developer or an entire team.

3. Choose Between an AI or a Hybrid Chatbot

You can minimize costs by choosing the right type of bot as per your needs. So, take the time to understand different options and their cost. Generally, you have two options. You can either go for an AI-powered solution or a hybrid one. Depending on your business, you may not need a custom AI bot. It’s here that you can reduce the cost.

A custom AI chatbot price is higher because of ML and NLP abilities. But if you don’t need such dynamic interactions, a hybrid bot may be better. They offer a balance between function and cost. These bots can manage more complex questions than a non-AI bot. You can enhance your process efficiency, but at a lower cost.

Carefully understand the differences between them. Then, make a choice that aligns with your integration needs and budget.

4. Leverage Free Trials and Demos

Increase the cost-efficacy of your chatbot through free trials and demos. They let you see what the program offers without paying for it. So, if something doesn’t fulfil your needs, you can avoid spending money on it. If the software does offer you good results, you can purchase it. This ensures that you are spending your money at the right place.

5. Build a Minimal Viable Product (MVP)

Don’t dive headfirst into creating a bot. Instead of wanting a full-fledged tool, focus on critical features. At the very basic level, your bot must be able to fulfil your user’s needs. Think of the features that will allow it to perform these tasks efficiently.

An MVP costs less than a sophisticated product. Your bot’s MVP will cost you less. But it will add efficiency to your business processes. With time, as you grow, you can add more features to it. Enhancing the bot at this stage won’t cost as much as it will at the earlier stages.

6. Use Chatbot Development Frameworks

A chatbot framework is a set of tools, libraries, and guidelines. Developers can use it to build and deploy chatbots quickly and efficiently. The frameworks consist of pre-built elements for tasks. These include NLP, integration with other platforms, and more.

Chatbot building platforms don’t give you the flexibility to add many features. So, if you need a more custom bot but at a lower price, these development frameworks will prove helpful.

In banking and healthcare, each chatbot query handled saves around 4 minutes of an agent’s time. This translates to about $0.50 – $0.70 in operational cost per query.
Juniper Research

Evaluating AI Chatbot Costs: A Smart Business Decision

An AI chatbot’s pricing depends on various factors. The key ones are its features, complexity, and use. If you are serious about business growth, using an AI-powered bot can help you achieve that. While you might feel that the initial cost is great, the long-term benefits outweigh it. Hopefully, this post has given you a good idea of how much you’ll need to spend to get such a solution for your business.

Frequently Asked Questions

1. Can I build my own AI chatbot?

You can create a functional chatbot by yourself. However, an advanced bot is a result of careful planning and technical expertise. If you want a solution that enhances your business efficiency, it’s best to take the help of a software firm.

2. Are AI bots profitable?

AI bots offer quick, 24/7 assistance. They improve customer experiences while cutting costs. By automating tasks, they allow businesses to focus on more strategic tasks. So, AI bots are certainly profitable.

3. How do AI chatbots work?

AI chatbots use ML algorithms and NLP. Through it, they get an idea of what the customer is asking. They then give a personalized reply. AI bots analyze text to find the user’s intent. Then they offer appropriate responses.

4. How much does it cost to build a generative AI chatbot?

A generative AI chatbot is one of the most advanced solutions. Skilled engineers create it. The cost of such a bot begins at $200,000.