Content Map
Understanding Chatbots
What Factors Can Affect Chatbot Development Cost?
How Much Does a Chatbot Cost?
Chatbot Cost-benefit Analysis
Tips to Reduce the Chatbot Cost
Ideally, all businesses should provide 24/7 support to customers. But let’s face it, not every organization can do that. It’s where chatbot technology comes in, offering round-the-clock assistance and improving agent productivity. Over time, these chatbots have evolved from basic auto-responders to savvy virtual assistants, handling complex tasks like email management, appointment scheduling, travel planning, and more.
Think about it: Apple’s Siri, Google Assistant, Amazon’s Alexa, and ChatGPT – they’re all examples of how chatbots have become indispensable in our digital lives. However, for those considering leveraging this innovative technology, the first question that often comes to mind is, “How much does a chatbot cost?”
Read on to find the answer!
First things first, let’s get to know more about chatbots.
Chatbots are software applications that mimic written or spoken human speech to simulate a conversation or interaction with a real person. There are two primary ways chatbots are offered to visitors: via web-based applications or standalone apps. Advanced chatbots also employ artificial intelligence (AI) and natural language processing (NLP) to analyze interactions at a nearly human level.
They range from basic programs with straightforward answers to complex digital assistants that learn and provide personalized responses. Communicating through both voice and text can be utilized on websites, applications, and messaging platforms like Facebook Messenger and WhatsApp.
Chances are you’ve encountered chatbot tools without even realizing it. Like when you’re on a website exploring a product, a window pops up, asking if you need help. Or maybe you’ve used voice commands to order your favorite coffee, and the chatbot will tell you when it’ll be ready and how much it costs.
Every business has unique needs when leveraging chatbots, which leads to varied development costs. Generally, the following are six key factors that determine chatbot prices, including the development approach, business goal, using purposes, types of chatbots, supported platforms, and integration options.
First and foremost, your deployment choice affects a lot – either custom development or via a chatbot software platform.
With custom development, you can create a chatbot from scratch with your in-house team or a third-party agency. Here, a dedicated team manages your chatbot project, making it a more expensive option.
On the contrary, a chatbot builder allows you to build chatbots swiftly from pre-made templates with great customization. Since a bot builder is often available through a monthly subscription fee, it saves you substantial costs.
Your business goals shape not only your chatbot price but also its use cases, types, and targeted channels. Businesses aim for long-term outcomes like task automation, increased site conversions, boosted sales, improved customer engagement, and reduced operational costs.
Defining these goals aids in outlining a pilot project, determining your investment level, and setting realistic expectations for return on investment (ROI). Additionally, they guide feature selection, deployment platform choices, essential integrations, and so on.
Not every chatbot serves the same purpose. They’re tailored for specific use cases, from demand generation to customer support, relying on your business goals.
For instance, a lead generation chatbot is ideal for boosting sales, while a customer support chatbot is just what you need to cut operational costs.
It’s your use cases that define the flow and integrations that will ultimately impact chatbot pricing.
Common chatbot use cases you should know are demand generation, appointment scheduling, product recommendations, FAQ chatbot, and order placement.
Although every chatbot shares the goal of engaging website visitors in conversation, their approaches vary. There are different types of chatbots, each with its own cost.
Think of it as a decision tree-structured in the conversation format with a predefined flow. Thus, they can’t answer any questions outside of the defined rules. Your organization will prepare answers for certain popular questions, such as “Where is my order?”, “How do I return an item?”, “Why is my coupon code not working?”, etc.
An AI chatbot incorporates machine learning and operates through an NLP engine. It interacts with users by understanding their questions’ intent and delivers responses accordingly. Over time, AI-powered chatbots improve their intent recognition and response accuracy.
Your chatbot doesn’t have to be strictly rule-based or AI-based; it can blend both approaches. Hybrid chatbots can combine rule-based functionalities with an understanding of intent and context.
Now, you might wonder, how does this affect pricing?
Well, as straightforward as they are, rule-based chatbots don’t require NLP engines, making them much more budget-friendly. Meanwhile, AI chatbots necessitating NLP engine integration, like Dialogflow or IBM Watson, cost approximately 2-3 times more.
Many businesses want to engage customers on popular platforms and messaging apps. You can deploy a bot on a website or Facebook for free, but integrating it with WhatsApp or SMS will incur extra charges from third-party chatbot vendors.
For instance, setting up a bot on WhatsApp requires obtaining an API from providers like Twilio or 360dialog. Pricing varies; Twilio, for instance, offers the first 1,000 conversations per month free in the US, followed by a $0.005 flat fee per interaction (25 hours).
Integrations are essential for chatbots. Whether it’s a scheduling chatbot demanding Calendly integration or a lead generation chatbot needing Salesforce, the comprehensive connectivity of these tools helps complete and enhance your chatbot solution greatly.
Standard integrations include Customer Relationship Management (CRM) systems, Content Management Systems (CMS), email marketing platforms, and helpdesk software. Integration costs range from $1000 to $10,000, depending on the complexity and customization needed.
Here comes the meat of the matter: how much does it actually cost to build a chatbot from start to finish?
We’ll explore chatbot pricing based on its biggest influencing factor – deployment type.
Here’s a quick breakdown:
To put it into perspective, let’s analyze three typical chatbot pricing models to better budget for your chatbot:
Choosing a subscription model from external chatbot builders stands out as the simplest and most favored route among companies. With a pre-built but customizable product, you can effortlessly navigate the chatbot platform, leveraging its flow and blocks to create bots tailored for FAQs, lead collection, or other purposes.
However, the cost of chatbots can range widely, fluctuating from $0 to $1,000 or more. Below is a brief overview:
Free chatbots are an excellent option when you need self-service but lack the budget. You can deploy a chatbot widget and utilize it for customer service at zero expense.
Popular providers of free chatbots include ManyChat, Chatfuel, and Tidio.
However, free chatbot plans have limitations compared to Pro plans, such as:
Yet, the free version still offers pretty much all the necessary features. In general, you can expect essential chatbot features as follows:
As your business expands, the need for advanced features arises, prompting a shift to paid plans. The good news is that most platforms offer free trial periods, allowing you to test whether the chatbot software aligns with your business needs.
So, what’s the cost of a chatbot under a Pro plan? Take a look at the pricing models of leading providers in this category:
Some of the key functionalities in Pro plans are:
Of course, the more you pay, the more advanced features you unlock. Here’s what WotNot provides as an example:
Enterprise chatbots boast the most extensive features but come with a higher fee. The pricing, however, is flexible, depending on which functionalities you’re willing to pay for. Due to case-by-case pricing, you need to contact the sales department for a personalized quote, often amounting to a four-digit figure.
This package caters to large companies with scalable, intricate automation and integration needs. Genesys DX, Drift, Teneo, WotNot, Maruti Techlabs, Haptik, Ubisend, and Ada are a few notable enterprise package providers you should check out.
Some great additional capabilities you can expect are:
In reality, it’s worth noting that many well-known chatbots used by leading corporations are developed from scratch by themselves. With this in mind, let’s find out the costs associated with in-house chatbot development in case you prefer DIY.
If you build a chatbot with internal resources, the initial costs will be significantly higher. The good thing is you have complete control over the platform, customization, and data in return.
Basically, to develop your own chatbot, you’d have to pay for the potential expenses listed below:
The money spent on chatbot development and deployment is a vital aspect to consider. The first thing is the platform license fee associated with third-party development platforms. Some examples include Dialogflow or Microsoft Bot Framework.
Another significant cost comes from programming, involving custom development and integration expenses. The payment for services such as the WhatsApp API falls under this category.
Lastly, we cannot overlook the hosting expenses. These comprise costs for a cloud-based or on-premise server. With the increase in data and automation, the choice between a cloud-based or on-premise server becomes an important decision, as each has associated maintenance costs.
Primarily, the chatbot development team heavily impacts the expenditure. You must pay salaries and contracts for engineers who construct and refine the system to function optimally.
The project manager role cannot be underestimated in this phase. They are responsible for controlling the development timeline and ensuring that the projects are completed on time and the milestones achievements are met in the process.
To round off the human resources aspect, the UI/UX designers lend their expertise to the operation. They are mainly tasked with designing the chat interface to streamline navigation. Moreover, they also ensure that the user experience is as smooth and convenient as possible, which in turn increases the value of the service in the eyes of the consumer.
Under the umbrella of data costs, there are several aspects for consideration. The data collection entails the process of gathering and purchasing data used in bot training. This data is instrumental in improving the efficacy of the bot and its usefulness to the end users.
The data storage expense is also worth noticing. It’s necessary to provide a secure storage environment for the data collected and used. As digital security becomes a higher priority in today’s digital age, investing in secure data storage helps protect valuable information and maintain the integrity of the bot’s operations.
One part of this is updates and upgrades, indicating regular improvements to keep the bot up-to-date. These updates not only enhance the functionality of the program but also ensure that it stays attuned to technological advancements and remains competitive.
Monitoring and analytics constitute a crucial part of maintenance, too. Various tools and services are available to monitor the bot’s performance and obtain insightful analytics. These tools deliver valuable feedback to prove instrumental in identifying areas for further improvement and potential innovations.
Training represents an additional vital commitment from a financial and resource perspective. Focused investment in staff training is needed to ensure effective chatbot usage, management, and monitoring. Without adequately trained staff, the chatbot and its capabilities could be underutilized or mismanaged.
The scope of costs further extends into Legal & Compliance aspects. These fees encompass the steps to develop and maintain the bot and ensure it adheres to data protection and compliance regulations. Ensuring adherence to these rules will help avoid legal complications and maintain user and customer trust.
Marketing and launching take a considerable amount of money as well. Your organization is required to do promotional activities to introduce the bot to users. Without effective marketing and a well-planned launch, a well-designed bot might fail to reach its intended audience or make the desired impact.
But how much exactly? Here’s a cost breakdown:
Please keep in mind that these figures, estimated by Glassdoor, are representative of the US labor market only.
You may not always need a designated data scientist to train your chatbot from scratch. With tools like the ChatGPT API, companies can integrate existing technology into their products or create a knowledge base for the chatbot, as seen with NotionAI and Intercom.
So, this amounts to a grand total of around $135,000 per year for one chatbot developer and one graphic designer, excluding maintenance or additional channel/integration costs.
If you seek cost-cutting, outsourcing to agencies is an excellent option due to its optimized pricing. Chatbot agencies typically charge from $10,000 to $50,000 for basic projects, with potential additional maintenance costs, which are pretty affordable compared to other options mentioned above.
You can consider the so-called consumption-based model to build your chatbot. This flexible approach allows you to pay a chatbot provider based on your actual usage each month. Google’s DialogFlow is a case in point. It charges $0.007 per text request and $0.06 per minute for audio input.
However, there’s a significant caveat. DialogFlow is an engine, not a ready-made chatbot for your website. You’ll need a developer or agency to code the chatbot to leverage Google’s offerings fully.
Factoring in additional expenses, the cost of this chatbot model includes:
As you can tell, this model is dynamic compared to the previous two. Your monthly bill can range from $10 to $100, depending on the number of interactions your virtual assistant has with clients throughout the month.
Knowing its price tag is one thing; deciding whether to invest in it is another. Thus, here we’ll discuss how to know if you should go for chatbot building or not by conducting a cost-benefit analysis.
Step 1. Estimate the Queries That Can be Automated
First of all, identify repetitive queries your agents encounter. Then, you should categorize them based on the level of support needed and distinguish between those suitable for automation and those requiring live agent interaction.
Step 2. Estimate the Current Time Spent on Answering Inquiries
Next up, calculate the time your representatives spend managing those queries.
For example, if checking order status takes 3 minutes and occurs 10 times a day, it results in a loss of 30 minutes daily and around 10 hours monthly.
Step 3. Calculate the Annual Cost of Handling Inquiries
Moving on, calculate the average hourly cost of a live chat agent, multiply that by the hours spent on the eligible queries per month, and then by 12 to find the annual cost.
As an illustration, if an agent earns $17 hourly and spends 3 hours daily on eligible queries, totaling 60 hours monthly and 720 hours annually, the annual cost would be $12,240
Step 4. Compare the Costs
The final step is to compare the costs of handling simple queries with a representative versus a chatbot to make the final decision. If the chatbot can save more money than it costs, it’s a green light!
Nonetheless, chatbots require a learning curve, and your representative’s support is quite a lot at first. Plus, in situations where customers are redirected to human reps by chatbots, the cost still adds up. But overall, they significantly speed up customer issue resolution and help free up human resources for more complex queries.
Ultimately, the decision is yours. Remember to do a comprehensive evaluation of cost savings, business goals, and the potential enhancement of customer service efficiency to see for yourself.
Since chatbot development is a huge investment, it’s essential to know how to minimize costs without compromising quality. Below are four important tips to help you build cost-effective chatbots.
Instead of pouring extensive resources into building a fully-featured product initially, you should consider developing a Minimum Viable Product (MVP) for the chatbot.
An MVP allows you to release a basic version with only fundamental features, gather user feedback early, and guide subsequent iterations cost-effectively. By focusing on core features, you reduce initial development costs and ensure future investments align with user needs and preferences.
Before jumping into development, make sure you have a clear picture of your ideal chatbot, its requirements, and the purpose behind its implementation. Uncertainties during or before the Software Development Life Cycle (SDLC) can lead to great extra costs. With a solid blueprint, you can avoid unnecessary changes or doubts throughout the whole process, which saves time and money significantly.
On top of that, planning allows the development team to estimate costs, consider alternative plans for a limited budget, and decide on the best approach – in-house development, using chatbot platforms/builders, or outsourcing.
When opting for a third-party chatbot software platform, always explore the free trial options first. Most custom chatbot builders offer trial versions, enabling you to enjoy all premium features for a limited time so that you can assess the platform’s suitability for your business needs without any upfront expenses.
Therefore, don’t forget to test before purchase to make your best decision!
As mentioned above, outsourcing stands out as a cost-effective choice when you embark on the chatbot development journey.
This approach grants you access to end-to-end services on a pay-as-you-go basis, eliminating the need for expensive infrastructure and technical support. Besides, you’ll have the chance to work alongside skilled professionals from around the world and draw on their expertise to enhance your chatbot’s quality and development process constantly.
More importantly, you can set the budget and KPIs in advance. This minimizes surprises, ensures transparency, and helps you complete the project on time and within the specified budget. What’s more, you’ll enjoy great scalability, effortlessly adjusting features to meet evolving business needs without exceeding the budget.
You may consider between AI software development and AI consulting firms to outsource your custom chatbot development. The former just focuses on the programming and implementation of AI-based systems. Meanwhile, the latter helps organizations understand and implement AI strategically. They guide companies on how AI can be employed in their business, what AI technologies would best fit, and how to manage AI implementation.
Obviously, there’s no one-size-fits-all answer to the question, “How much does a chatbot cost?”. Different chatbot providers offer diverse plans, and it’s your job to evaluate your needs and decide what works best for you. Just always make sure that its cost is never higher than the value you can derive from it. Also, remember to carry out a thorough cost-benefit analysis and follow our tips above to minimize custom chatbot development costs.
Should you opt for outsourcing, it’s critical to choose a trustworthy and experienced partner like Neurond AI. We provide all sorts of artificial intelligence services, chatbot development included. Our expertise lies in crafting sophisticated virtual assistants that seamlessly integrate into websites, social media, and messaging apps. Fueled by natural language processing, our fully customized chatbot solutions have proven to facilitate your seamless customer communication across industries.
For more assistance, contact us now!
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