How Much Does It Cost to Develop a Chatbot in 2023

How much does it cost to build a chatbot? This question is becoming increasingly important for modern businesses, as chatbots are indispensable for attracting and retaining customers. These intelligent assistants can automate routine tasks and personalize customer interactions, increasing their loyalty and driving sales.

This article reveals the cost of building a chatbot and factors affecting the price and also sheds light on how to create a cost-efficient chatbot. You will learn what features and tools you will need to build a chatbot and how they influence the final cost.

Custom chatbot development is a diversified process. So how much does it cost to build a chatbot for your business? The price can range from $40,000 to $150,000. This difference is because there are a vast number of factors that affect the cost of chatbot development. So, before we get straight to the detailed estimation, you have to know more about these aspects.

The first factor and most tangible affecting the price is your requirements. As you may understand, a chatbot is not a common type of software. Chatbots are a kind of software container. Whenever you're building a CRM system or a fitness app, you have a vision of it even without the feature list. The reason is these types of apps are somehow similar to their analogs. They may differ in some advanced features, but the basic concept is always the same.

However, when it comes to chatbot software, things turn upside down. For example, a distributing chatbot, like H&M’s, and a simple FAQ bot are two different development scopes with different chatbots pricing. When building a distributing one, you’ll need to take care of payment gateway and security issues, while a FAQ chatbot technology needs only a conversation pattern.

So, chatbot features depend on your requirements. And the price, in its turn, depends on its complexity. To calculate the approximate price, you have to know what features will be developed. You can contact us to get help with the feature list and project estimate.

Before the development, you have to decide what kind of chatbot you want to have. Each kind is a different complexity, so your choice will significantly impact the cost.

Analyzing your requirements and business goals helps you identify whuch of these chatbot types you need to develop, giving you a valuable insights about costs.

When talking to a chatbot, it sometimes acts like a human being. So, you might ask, " How do chatbots know what to answer?". Apart from predefined answers, chatbots can learn from past conversations. With the help of data analysis and machine learning algorithms, chatbots single out speech structures from received messages and use them in conversations.

However, machine learning is a time-consuming process. Firstly, developers need to feed the chatbot with lots of data to bring basic skills for answering questions. Later, the chatbot will handle more complex queries as the number of processed data rises.

Mind that data analysis algorithms, predictive analytics, and work with knowledge discovery tools are time-consuming processes and so will affect the price.

As it becomes clear, many aspects can increase the price. But what can you do to lower the financial pressure? In this section, I'll cover some tools that will help you to fit into your budget.

Instead of building a chatbot from scratch, you can use third-party platforms. They allow creating a chatbot in the shortest terms. All you need to do is create a conversation structure and links between the messages. However, these platforms grant you the speed, but in return, they take the flexibility away. Most platforms don't support payment gateways and machine AI integration.

The most well-known platform is Chatfuel. It lets you build conversational structures and key features of a chatbot in a drag-and-drop way. This software is free unless your chatbot gains 50 subscribers. Then, the price starts from $15 per month, but it depends on the number of subscribers. The main Chatfuel's drawback is that it supports only Facebook Messenger.

Botsify is Chatfuel's tough rival. It also makes chatbots for Facebook Messenger and uses a drag-and-drop system. However, the prices are more affordable. With Botsify, you'll have to pay $50/month for 30,000 unique users, while Chatfuel will charge you more than $200/month for the same number of clients. Nevertheless, Botsify provides free chatbot features for only two weeks, and it doesn't have pricing plans for a small number of users, like Chatfuel.

What if you need advanced features of a chatbot rather than a quickly built product? In this case, frameworks for chatbot development will solve your problem. They leave you enough space for customization and code managing but, at the same time, let you deploy some routine code in a few moments. Still, these frameworks require strong programming expertise or an experienced software development company.

BotMan is a good example of a chatbot development framework written in PHP. It’s compatible with almost every well-known messenger on the market. This framework allows developers to build chatbots that understand commands and browse through user attachments. Moreover, this framework supports Natural Language Processing.

Microsoft Bot Framework has an open-source SDK and tools for building and testing chatbots. This framework mostly supports Microsoft’s services like Cortana, Microsoft Teams, Skype. However, Slack and Facebook Messenger are compatible with this framework too. With the help of Azure Cognitive Services, you can develop AI chatbot features. It’ll understand, speak, and learn from chats with users. C# and Node.js are the only languages that developers can use with this framework.

When it comes to chatbot pricing model, the cost of its development plays an important role. In order to find an option with the most acceptable quality-price ratio, it is worth looking at outsourced software providers. This way you can get a number of advantages as following:

• A wide selection of regions with a variety of hourly rates — you can easily find the most acceptable price for you. For example, it is worth paying attention to Central and Eastern Europe (CEE Region). This area is known for its cost-effectiveness and many software companies that charge $50-75 per hour while providing a high level of competence.
• A vast array of specialists in different areas — you're sure to find someone who will make the perfect solution faster when assembling a team for building chatbot in-house.
• A lot of outsourcers on the market — for example there are more than 10000 companies on the Clutch platform.
• Choice of cooperation models for your needs — for example, you can augment your team with required specialists or hire a dedicated development team.
• Access to a wide range of technologies for implementation — outsourcing companies are much more likely to find specialists that are experienced working with different technologies

If you want to launch a product faster so that it starts generating revenue, it's a great idea to start by creating a MVP. This way, the team builds a lean a version of the basic chatbot that contains the minimum required set of features. Later, after you get the first customer feedback, you can add more advanced features. If you build a chatbot with standard features first, this approach allows you to significantly reduce the initial cost of AI chatbot development.

Let's move on to a detailed analysis of what kind of features need to be implemented in the virtual assistant chatbot MVP.

Any simple chatbot contains a basic set of features that allows it to function properly. These are the features you should consider to build your own chatbot at a lower price and increase clients' satisfaction.

Who can use it: Any business.

Needless to say that chatting is the primary feature of a chatbot. Whether you need a simple FAQ chatbot or an AI-powered NLP chatbot platforms, a well-built conversation pattern is a must-have for success of both of these solutions.

First and foremost, the message sequence should be logical and clear to users. For example, when the user asks: "What's the address of your company?" it should provide an address only. If the chatbot tells the user about the company’s history instead, that's unacceptable.

Besides, messages shouldn't contain grammar errors and follow the general tone of the conversation. If your chatbot is more unofficial and refers to a customer as a "buddy", don't call him "mister" in the next message. If you can't solve this issue on your own, it may be better to hire a writer to create texts.

Who can use it: E-commerce, restaurants, retail, healthcare providers.

This chatbot functionality concerns commerce. If you're creating an AI chatbot to boost your sales and expand distribution channels, you have to provide at least one payment method. Here you will face a dilemma: implementing third parties or building a custom payment system?

As for the custom payment system development, there's a gigantic amount of work to be done, which will definitely raise the cost of building a fully customized chatbot. You have to take care of:

• Encryption of each transaction.
• Server issues. Where will they be located? How fast can they perform operations?
• PCI DSS for the security of credit cards processing.
• Architecture. Cloud vs. on-premise? Integration, benefits, and pitfalls of both.
• Analytics. The ability to gather data about payments and overall performance of your system.

With a properly developed payment system, you don't have to worry about the safety of payments and get such bonuses as payment analytics and user behavior. But the sweetest piece of the pie is that you don't have to pay a fee that third parties charge. Still, the cost of building a chatbot with a custom payment system is so big that smaller companies prefer starting chatbot with payment gateways like Stripe, PayPal, Braintree, and others.

If you're into third parties, your main concern will be choosing a reliable vendor. Braintree, Stripe, and PayPal are verified companies with the highest transaction speed and payment security. The only drawback of these third parties is fees.

In most cases, the third-party payment system is the best option for small and mid-sized businesses. However, if you intend to build a custom payment system, you have to find a professional software development company.

Who can use it: Restaurants, gyms, delivery services.

Another point on the chatbot features list is an integration of online maps. Let's assume that you're a restaurant owner. You can attract new clients with the help of a chatbot. If they have never been to your place before, let them navigate via the chatbot. When the user types: "Show me the way", your chatbot marks the restaurant's location on the map.

This chatbot feature can be built with Google Maps Platform in no time, but it will enhance new customers to visit your place. Later on, you can add an ordering on-the-go feature. Thus, users will order the meal via the chatbot beforehand, pay for it, and get it as soon as they get to the restaurant.

Another use case for geolocation is food delivery. Users can choose their preferred meal inside a chatbot and share their geolocation with a courier. The convenience of this method lies in the fact that the client doesn't need to make phone calls or install side apps.

Who can use it: Any business

That's not exactly a chatbot feature, but more like a personal trait of your chatbot. We can't deny that when someone refers to you by name, the conversation feels more personal. Combine it with an individual attitude, create a memorable name, and add catchy phrases to the chatbot's vocabulary. That's the recipe for a chatbot that will be remembered for a long (it still requires useful chatbot functionality). In the perfect world, you could hire a brand expert that would help you to build a chatbot's image. But if you're on a budget, it's time to show your creativity.

Who can use it: E-commerce, delivery services, healthcare providers.

Here's one of the main chatbot needs for e-commerce. The very first use case that comes to mind is redeeming bonuses. Let's say that the user has some bonuses for previous purchases. They will buy another product via a chatbot and pay a part of the price with bonuses. However, if the chatbot isn't connected to the user's account, it doesn't have information about those savings. Thus, if you’re an e-commerce vendor, ensure that your distribution platforms are synced.

It won't only help customers but also benefit you. With synchronized accounts, you can stimulate customers to buy products from their wishlists. When there's a discount for a specific product, the customer receives a message from a chatbot. That's much more effective than emailing. Also, customers can add the goods to the cart and proceed to payments on the go in the messenger.

These were the essential chatbot features for different niches. In theory, you're good to go with this feature list. But what can you do to make your chatbot even better? It's time to dive into advanced AI-based chatbot features.

When we say Artificial Intelligence, we actually mean that the chatbot is powered by machine learning algorithms. Using them, the chatbot can learn from its experience without human presence. When the user queries, the software finds similar patterns in vast data clusters and responds to the user according to this data. At first, the output may be confusing. But that's why it's called learning. The more data the chatbot gathers, the better it performs. With every correct response, the chatbot gets smarter because it can form a base of answers based on a successful pattern.

The best tools for creating AI chatbot features are Wit.AI, Microsoft Bot Framework, and IBM Watson. Each of them has custom tools for building both basic features and advanced AI functionalities.

NLP, or natural language processing, is the AI chatbot widget, which is responsible for interactions between individuals and computers. In plain language, NLP provides an excellent communicating experience between the user and the chatbot. Examples of NLP technology are voice assistants like Alexa, Cortana, and Siri.

However, NLP is also one of the greatest challenges in computer science. The reason is that it's hard for the computer to understand the user's message right. Things like sarcasm, idioms, and figures of speech confuse the machine. So, the conversation may sometimes face a dead-end.

There are a lot of algorithms and turn-key solutions for this, but they often can't deliver quality features for your chatbot. That's why it's better to develop custom NLP algorithms for the chatbot from scratch.

It is worth understanding the basic steps of chatbot development to find out how much does a chatbot cost in 2024. Let's look at the whole process in detail:

As we mentioned earlier, cooperating with outsourced vendors is a good way to reduce chatbot costs. However, it is also essential to select a technology partner who can pick up the project even at the raw idea stage. To make the right choice, you can study customer reviews on the professional platforms, like Clutch and projects portfolio.

The first step of your cooperation with a software provider will be a meeting with the Solution Design team, which includes business analysts, a solution architect, and a designer. Specialists determine business goals, work scope, and basic quality attributes. You will also receive a rough estimate of the chatbot price, team composition, and a timeline as part of the solution stage. At the end of this step, the vendor's team forms a proposal, and you sign a contract.

At this stage all your chatbot requirements are converted into a clear plan. All the previously agreed-upon conditions are detailed, such as the platforms to integrate with chatbots, third-party integrations, feature sets, etc. During the Discovery Phase, the experts:

• Create a detailed Feature Breakdown List (FBL)
• Develop design concept and UX map
• Conduct a quality attributes workshop
• Calculate more precise estimates for chatbot development costs

In the case of chatbot development, you should pay much attention to its design. The user experience should be high because it is one of the critical components of success. It is crucial to think about the design so that it is easy and understandable for the user to use your chatbot. The higher the user satisfaction, the higher your profits will be. A professional vendor, like Cleveroad, with experienced UI/UX designers will help create a successful product.

Once all the project details are approved, developers start working with all the documents created during the Discovery Phase. At Cleveroad, development takes place in several sprints, with the Project Manager assigning a specific part of a development to each sprint. Each phase is accompanied by quality assurance. When all sprints are completed, the QA team performs extensive testing, including verification of all features, stress testing, and more.

After making the final tweaks, the chatbot is ready to launch. The Cleveroad team helps you to integrate the newly created chatbot into your business enviroment. Also, we provide all project documents such as specifications, design, project plan, source code, etc. Once your chatbot is launched, continue cooperation with the software provider, as such projects require post-release support. It includes:

• Bug fixing
• Stability and performance improvements
• Code optimization
• Adding new features, etc.

The cost to build a chatbot may vary from $40,000 to $150,000 and up. It heavily depends on its complexity, the features implemented, and the region where you hire developers. Our analysts have calculated the approximate price of developing a chatbot on the basic features. The price is based on the average hourly rate of $50 in Central/North Europe.

Remember, the price above is approximate and includes MVP expenses only. It's hard to tell how much does it cost to build a chatbot without project details. Feel free to contact our Senior Business Analysts to get a consultation and request project cost estimation.

Cleveroad is a professional company that has been providing software development services for more than 10 years. Our team is based in Central and Northern Europe. Our experts, including 120+ experienced software engineers, have completed more than 170 successful projects. The Cleveroad team has significant expertise in developing solutions for Logistics, Healthcare, FinTech, Education, Tourism, and many other industries. By creating a chatbot with Cleveroad, you can get a lot of benefits:

• Flexible collaboration models. You'll be able to choose the option that gives you the best chatbot development cost.
• High quality. Our team carries out complete quality control at all stages.
• Full-service package. Our experts will guide your project from idea validation and planning to development and implementation.
• High-quality consulting. The Project Manager and Business Analysts will help you determine the features that will fit the planned cost of a chatbot and your needs.
• The price-quality ratio. Our experts will help you save on development costs while providing a final quality product.

If you need to create a chatbot, contact our experts. They will be able to advise you and create a product that will satisfy your customers. A quality chatbot is a huge step ahead of your competitors to boost your business.