Development Cost of AI Agent: A Complete Guide

AI agents are taking over perhaps every industry that we know of today and it can be hard to understand the development cost of AI agent if you’re new to the space. The fact is that AI is no longer a niche technology and businesses from all walks of life are seeing how AI agents can transform the way they approach customers. Because of this more and more traditional businesses are coming into the party and enhancing their customer relations.

In this blog, we are going to talk about the cost specifically for AI agent development and see the different options you have as a business. We are also going to explore the differences between these options and how you can maximize your efficiency and minimize your overheads when implementing AI agents in your business.

Let’s jump right in.

Why Knowing the Development Cost of AI Agents is Crucial for Your Business

As a business, knowing the development cost of AI agent is crucial because taking the decision to implement AI agents in your business is just the beginning. I say this because all AI agents are not built alike. In fact AI development has many nuances but one thing that remains the same is how much computing power these programs need. Most of the time running these AI agents may not be the concern but the training these AI models require a lot of GPU or TPU computing power. However, you may not be aware of these costs when you decide on integrating your AI agent into your business.

The development cost of AI agent can vary depending on what kind of AI agent you are using and what technologies you are using. Because there are a few ways to build AI agents and depending on the nature of your business you can choose different paths forward that will suit your business and your goals.

There are majorly 2 paths that you can take when building an AI agent; Number 1 is to use a prebuilt or open source model that can handle conversational inputs and train it with your own data.

Training Pre Built and Open Source AI Models

The development cost of AI agent training will probably be a big overhead because you need a lot of GPU or TPU computing power for this. Today, you don’t have to buy these devices yourself you can easily rent them from a cloud services provider like AWS, GCP, etc., but this will also carry significant costs.

Now, this will not be a deal breaker if you’re a funded startup or an established business because your operations will be on a large scale. But if you’re a smaller business then you may find these costs expensive.

The second path that you can take is to integrate OpenAI’s ChatGPT APIs and this can cut down the development cost of AI agent dramatically.

Integrating ChatGPT APIs

For smaller businesses and even for larger businesses that want to implement their AI agent quickly using ChatGPT APIs to build your AI agent will be the right direction forward. However, don’t be fooled by the ease of use of these APIs because they are quite powerful. Just because you’re using a third party API doesn’t mean that you don’t have any control over how your AI agent operates.

In fact, you can use ChatGPT APIs and train their model to create a tailored AI agent that suits your business requirements smoothly. The development cost of AI agent in this case would be the fees you pay to use the API and also the fees you pay to train your model. All you have to do is create a new knowledge base for your implementation and you can easily train one of the best AI models in the business.

Many businesses choose to go this route because it is quick, it costs much less than training an open source model. It also gives flexibility for your AI chatbot development process because instead of spending time training a raw model you can focus that time on the user experience design or adding specific features. The development cost of AI agent as you can see varies a bit depending on what you are trying to accomplish.

Estimated Cost Breakdown for AI Agent Development

Now that we’ve explored the different methods on how to build AI agent and the different paths that you can take let's look at how much it will cost. In other words let’s look at the cost breakdown for conversational AI agent development.

Let’s break this down into 3 parts this times; Training open source AI models, building an AI agent using ChatGPT APIs and using prebuilt AI agents already in the market. I didn’t include this last bit in earlier parts of our conversation about the development cost of AI agent because here you’re really building an AI agent you’re just using a third party chatbot.

Cost of building an AI agent by training open source AI models

Acquiring the model should be pretty easy today because repositories like Hugging Face are just a goldmine of open source AI models. Since these models are open source you don’t need to pay for them and these are quite capable models. The world of open source softwares is full of smart and passionate people who build just because they love the technology and because they want to help people. So, although development cost of AI agent with this method does not include paying for the AI model you can get some advanced functionalities with these models because some of them are already pretrained by the open source community.

If we break this down into its basics:

Cost of building an AI agent by using ChatGPT APIs

What you have to keep in mind is that some of these costs like the backend and frontend development may not apply when you choose an agency because most of the time you are getting a quote for a complete package. However, you will have to spend money for the other services like cloud and APIs according to the nature of your project.

The Cost of Using Pre-Built vs. Custom AI Agents

Now that we have an idea of how much the development cost of AI agent will be in different scenarios let’s talk about the differences in costs between using a prebuilt AI agent and a custom AI agent. The custom route as you can imagine can be expensive and training models is no child’s play and it requires a significant amount of engineering. When I say custom there’s another avenue that we have not talked about yet and that is to create an AI model yourself. We are probably better off not talking about that because if training an AI model is expensive think about how much it would cost to build an AI model and then train it.

For this blog, we’re gonna stick to development cost of AI agent in terms of business viability meaning that we are going to talk about affordable AI agent development methods which are practical. And yes, training an open source AI model is practical if your business use case demands it. If the scale of your business is large and you deal with diverse customers on a daily basis. The telecom industry and finance industry are great examples for where training open source models make sense.

Getting back to our conversation, prebuilt AI agents are out there and they can help you with basic tasks like handling conversations and maybe generating text, images and documents through generative AI. The development cost of AI agent when it comes to prebuilt systems is usually lower than using open source models. It could be lower than using ChatGPT APIs too given that you have a decent customer base because paid APIs usually work on a pay per hit basis. So you will pay for credits for the API and you will be billed based on the credit usage. This could be very scalable if you’re smart about pricing your products and services properly. If you don't, chances are that you may spend more on ChatGPT charges than you are generating revenue.

The development cost of AI agent in the prebuilt market also varies based on the solution you choose.

Let’s look at that too.

Using a SaaS AI Agent Solution

You probably already know this but there are companies out there that provide AI agents in the Software as a Service business model. These are convenient if you’re a smaller startup or let’s say a local business because your customer base is just growing and the queries you get may not not be very diverse. Integrating a good AI agent product into your customer service or relationship process can be very rewarding. The development cost of AI agent in this context will be zero because you’re not developing a new product and all you have to do is pay the monthly subscription fees for the AI agent.

The subscriptions for third party AI agent solutions like this range from $20 to $30 for basic plans. The only problem here is that these AI agents will have limitations and most of the time companies put limits on conversations which are not very scalable. You could buy a more expensive plan but you’re paying fixed costs here even if you’re not using all the AI features. This may also not work out for you if you’re trying to implement multi-agent systems into your business.

Prebuilt AI Agent Solutions as an Enterprise Solution

The development cost of AI agent in this scenario will include the integration charges of the AI agent with your business and the cost of the product itself. This type of solution would require you to host the AI agent yourself on a cloud provider of your choosing which is part of the cost of running the software. Now if you think about which kind of businesses can benefit from this I would say medium sized businesses that want to switch to AI quickly but don’t want cookie cutter solutions. Meaning that you have a good customer base with diverse customer queries.

The development cost of AI agent as we spoke about will also include the integration costs because the companies that sell these products usually will also do the integration for you as a complete package. However, since this is a standalone software with majority of the functionality built into them they can be expansive. Additionally, if you want to train the AI agent with your own data that will add to the expense. This is a very good middle ground solution if you really need a very capable AI agent but don’t have a few months to wait. You can get these up and running within a few weeks or a month. Very flexible for medium sized organizations with diverse requirements while still keeping the development cost of AI agent affordable. These solutions can usually cost between $10,000 to $20,000 dollar along with the integration and maintenance charges.

Building a Custom AI Agent

Creating a custom AI agent will give you a lot of flexibility in terms of how you want the AI agent to perform. When you’re going the custom route you have the control over everything including the user interface, the architecture and the training. One thing to note here is that the cost of developing a custom AI agent given that you’re not building the AI model yourself could be lower than the prebuilt solution because you are building your AI agent for a particular purpose.

The development cost of AI agent can be managed in this case because you will be using an open source AI model to build your chatbot which is free. Additionally, you may not need a lot of the flashy features you can find on prebuilt AI agent products. While still being able to use your AI agent to the fullest without having to confine yourself within the platform’s prescribed limits. The other most important thing here is that you will be able to constantly retrain your AI agent periodically to improve its performance and give your users a more streamlined customer experience.

The development cost of AI agent is just one piece of a much larger puzzle so building a good product for your business rather than going for cheap AI agent development solutions is always a good step for the long term. Although in the short term you will have to fund the development which can be expensive if you’re a very small business. But chances are that if you are a very small business you wouldn’t need an AI agent because you can manage with human agents for customer queries. We already have a detailed chart that explains these costs above so you can refer to that.

Hidden Costs in AI Agent Development

When you look at the development cost of AI agent the hidden costs are usually related to the overhead. Again we have a good chart that explains this but building and training AI agents requires a lot of computing power. In most cases you will be spending money for the training of your AI agent because you will have to rent high performance GPUs from a cloud provider. There are some workarounds to reduce the cost of training AI agents because even if you hire an agency for the AI agent development process their services charges will be separate from the infrastructure charges.

The major development cost of AI agent will come from the training phase. Adding to this point if you’re using ChatGPT APIs for your AI agent it can be tricky to understand how much it will cost in the long term. Because as we spoke about before you are purchasing credits from them and if you are on a pay as you go model then you could lose track of how much API usage is chipping away on your budget. However, in most cases handling users won’t be your concern because you will have a good idea of how many customers you have and how many new customers are likely to interact with your business.

The development cost of AI agent I’m talking about here is if a malicious actor exploits your AI agent and sends repeated irrelevant hits. This would cause your system to eat up the credits fast and you can end up with a huge bill. It’s not a deal breaker today because you can have security measures in place to stop this from happening like captchas and algorithms. But you have to be aware of the potential consequences when you’re thinking about your business as a whole.

Ways to Reduce the Development Cost of AI Agents

Now, we get to the bit where you can find a few workarounds to reduce your development cost of AI agent. And no these are not complex methods like using advanced AI agent frameworks these are just technological practices and methods you can use to cut down your costs.

Using Pretrained Models

You can cut down your costs significantly if you use pre trained models like ChatGPT’s earlier models on any other model available on platforms like Hugging Face. Even with these models you may have to do some retraining because the AI model will be trained on general data and you would want to train the model on data relevant to your business. However, the development cost of AI agent in this scenario won’t be as expensive as training an AI model from scratch and you can get good performing AI agents with this method.

Opting for API-Based Approaches

Another way to reduce the costs is to use third party APIs like OpenAI’s CharGPT, Anthropic, Cohere, etc., that are capable of providing you with the advanced features of AI agents while keeping your infrastructure costs down. Here also you may have to train the model with your own data but most of these AI models already have significant training done to them. This is good for the development cost of AI agent because even if you don’t train the AI model with a lot of data it will still be able to handle conversations and help your customers through human like conversations.

You can choose to train the AI model to answer specific questions about your product or service. Some businesses even skip the training part all together and just let the chatbot answer questions based on documentation about their product or service. This too is a viable option when you’re building an AI agent for your business but may not be suitable for full scale products or elaborate services. However, this will reduce the development cost of AI agent and allow you to improve your customer experience.

Final Thoughts on the Development Cost of AI Agents

Creating AI agents and implementing them into your customer relationship process can be very rewarding especially in the long term. AI agents allow you to respond to customer requests and queries instantly on a 24/7 basis. However, like any technology there are limitations and also advantages to using AI agents. In our last blog we spoke about how to build AI agent and in this blog I hope you’ve understood on a high level approximately how much to build one. The development cost of AI agent as we spoke about has a lot of nuances so make sure you pick a path that makes sense for your specific business.