What is Token cost?

Token cost is what AI models charge per "token" — a chunk of text — processed as input and output. It's the main driver of an AI bill.

Models break text into tokens (roughly a few characters each) and charge for the tokens they read and generate. Longer prompts, longer answers, and more powerful models all push the cost up. This is why an AI bill can climb without anyone changing how often they use it.

Businesses keep token cost down by matching the model to the task, keeping prompts efficient, and cutting the re-runs that come from vague prompts — paying for a good answer once rather than several mediocre ones.

Related guide: How to reduce your company's AI bill