Here’s how much it costs to make a chatbot

The new world of businesses communicating with consumers via instant messaging is getting plenty of attention by the media, entrepreneurs, investors, developers, and marketers alike.

Mostly regarded through the perspective of chatbots — which are powered by automated scripts and in some cases even natural language understanding — this new path allows a whole new way for consumers to engage with service providers, and vice versa.

This new space is being dissected in every possible way: People are analyzing various frameworks, APIs, best practices, use cases, and even tips for marketers. Heck, I even wrote a couple of posts about it. Yet no one has been written about what we all really care about: money. How much does it cost to design, build, deploy, and maintain a chatbot?

There are many ways of looking at it. Let’s explore some of the variables that should be taken into account before building a chatbot:

1. What type of business are you running: enterprise, medium-large, SMB?
2. What is your business goal: customer support, retention, upsell, subscription, plain entertainment?
3. Number of messaging platforms you’re going for: Facebook Messenger, Kik, Telegram, etc.
4. What volume do you expect your chatbot to have: hundreds, thousands, or millions of users and/or conversations?

Question #1 is fairly simple. Question #2 requires thinking, since this space is so new and most businesses are experimenting with bots to find the best way to gain traction and build on that. But still, you have to start somewhere. Question #3 is also fairly easy, as you’d normally start with 1 or 2 platforms and then maybe expand.

As for question #4, that’s the trickiest one. And it makes bot budgeting a tricky thing for businesses to digest.

Let’s see which options are available to develop and pay for a chatbot:

1. Software development companies. These will cost the most, and it will take time to configure and execute. Unless you’re a large enterprise, there’s no reason for you to go there. From several checks and surveys we’ve done, we’re looking at a minimum setup of $5,000 to $10,000 per bot, followed by monthly maintenance in the low thousands.
2. In-house team: Here too, the cost is very high. And you don’t want to place such a high bet on hiring or shifting focus of existing employees into developing something that keeps evolving continuously. I would only advise large and tech-savvy businesses to keep it in the family. The cost here is based on what you pay employees who match this career profile, which is pricey.
3. Self-service platforms: Here is where it all gets complicated. The fact of the matter is, most self-serve platforms aren’t sure yet how much they need to charge. Let’s look at some business models out there that we sampled:
   1. $19/month for 15 bots and maximum of 2500 interactions. How would anyone know whether they need 1, 5, or 15 bots? And how can you estimate the number of interactions? How do you define an interaction?
   2. $50/month for 25 bots and maximum of 20,000 messages. With this option you’re paying more per bot than option A, but much less per message. But does one message equal one interaction?
   3. $29.99/month, 1 bot, 1000 users, 10,000 automated messages. Wait, what? I have to estimate the number of users too? And aren’t all bot messages automated?

Confused? So am I. Obviously there are still no industry standards in pricing or in jargon. Still, most of you out there will rightfully go for a self-service solution. If doing so, here are some tips to help you make it right:

• Think of what business objectives you’re looking to reach. Try to benchmark against something you know. For example, if you’re a publisher looking to bring traffic to your site, try comparing it to CPC (cost per click) you’d be paying at a recommendation engine such as Outbrain; later on you’ll want to compare more long-term metrics such as time on site, increase in returning users, etc.). If your business is ecommerce, reverse-calculate what you pay per item being sold, etc.
• Decide on a budget and time frame and allocate as much as possible. Try not to be held against strict monthly plans. Once you’ve characterized what you’re building, give it a real chance and then negotiate toward what makes for a valuable deal.
• Building a bot is not even half of the process. What’s important is how you get it spread out, distributed virally, optimized in real time, and monetized. No one out there will do it for you, at least for now. A true full service would be one that makes your business successful through instant messaging, provides value to consumers and constantly improves itself by mining the data and taking action upon it.

Try not to constrain yourself to the confusing cost metrics out there. Invest your time in building something with great value, and very quickly you will know how much you should — and want — to pay for it.