HomeData scienceCalculating the Price of Generative AI

Calculating the Price of Generative AI


  • The price of implementing generative AI in enterprise can vary from just a few hundred {dollars} per thirty days to $190,000 (and counting) for a bespoke generative AI resolution based mostly on a fine-tuned open-source mannequin
  • This generative AI price distinction is pushed by a number of components, together with the duties you are trying to improve, the mannequin that most accurately fits these duties, and the chosen implementation strategy
  • To optimize the related bills, it is advisable to rigorously think about your mission necessities, assess on-premises and cloud infrastructure bills, and select between hiring in-house AI expertise and outsourcing the mission to a third-party

We have already instructed you how generative synthetic intelligence (Gen AI) compares to conventional AI and what execs and cons the know-how has. The ITRex generative AI consulting staff has additionally delved into Gen AI‘s use instances throughout a number of industries, together with healthcare, retail, and provide chains.

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Moreover, we have evaluated the price of constructing synthetic intelligence programs, infrastructure, and all, and zoomed in on machine studying (ML) prices, calculating the bills related to getting ready coaching knowledge, fine-tuning fashions, and deploying ML-powered options.

Now it is time to decipher the price of generative AI implementation in enterprise.

This evaluation could be difficult, because the specifics of your mission are but unknown to us.

Nevertheless, we might leverage our generative AI consulting experience to discover Gen AI companies’ pricing and enumerate the important thing components behind Gen AI mission prices. This manner, we’ll equip you with the data to make knowledgeable choices, probably saving your enterprise appreciable time and sources on this quickly evolving tech panorama.

? Let’s dive proper in then!

The selection of a mannequin and implementation strategy as the important thing components affecting the price of generative AI

When fascinated about incorporating generative synthetic intelligence into your organization’s know-how stack, it’s crucial to think about the next:

  • What enterprise duties are you going to reinforce with generative AI?
  • What mannequin would suffice for these duties?

On the coronary heart of generative AI options lie basis fashions – i.e., massive fashions educated on super quantities of knowledge. Basically, basis fashions function a foundation for creating bespoke Gen AI options, simplifying the event course of, and bringing down generative AI prices. Their capabilities sometimes embody pure language processing (NLP), pc imaginative and prescient (CV), and content material technology.

Basis fashions’ cognitive capabilities largely depend upon the variety of parameters they have been educated on. On this context, parameters seek advice from mannequin components which might be realized from coaching knowledge, equivalent to weights in a neural community. These parameters assist the mannequin make choices and predictions. The next desk illustrates the correlation between the variety of parameters – basically, the amount of those decision-making components – and the mannequin’s cognitive capabilities.

Supply: ITRexgroup.com

The variety of parameters, nevertheless, will not be the one issue that influences the capabilities of basis fashions. The standard and variety of the coaching knowledge are equally essential. Coaching knowledge is the data fed into the mannequin to study from, encompassing a variety of examples that assist the mannequin perceive and interpret new knowledge. Moreover, the mannequin’s structure – i.e., the structural design of how the parameters and knowledge work together – and the effectivity of the educational algorithms, which decide how successfully the mannequin learns from knowledge, play crucial roles. Because of this, in some duties, a mannequin with fewer parameters however higher coaching knowledge or a extra environment friendly structure can outperform a bigger mannequin.

How might your organization choose a basis mannequin that’s each efficient and meets your expectations concerning the price of generative AI?

All present generative AI fashions could be loosely labeled into two varieties:

  • Closed-sourced fashions are developed by massive know-how corporations, equivalent to Google, Meta, Microsoft, and OpenAI. Their supply code, structure, and utility programming interfaces (APIs) could be utterly proprietary or made accessible to 3rd events (normally for a price, which is basically the price of the generative AI resolution). In some instances, you may fine-tune the efficiency of closed-source fashions utilizing your knowledge. For the aim of this text, we’ll be referring to closed-source fashions as commercially accessible generative AI options. The foremost benefit of such fashions is that they arrive with a cloud infrastructure and are absolutely maintained by the unique developer.
  • Open-source fashions have their supply code, coaching methods, and typically even the coaching knowledge accessible for public use and modification. Your organization might use such fashions “as is” or retrain them by yourself knowledge to realize higher accuracy and efficiency. Nevertheless, you may must arrange an on-premises or cloud infrastructure for the mannequin to run on. The price of such generative AI fashions will thus embody computing prices and, if you happen to select to reinforce the Gen AI resolution, the bills related to mannequin coaching.

Take a look at the desk beneath for a fast overview of the closed-source and open-source fashions’ traits.

Supply: ITRexgroup.com

Let’s summarize.

If your organization is contemplating implementing generative AI, there are 4 major methods to do it:

  1. Utilizing closed-source fashions with out customization. Generative AI pioneers can combine off-the-shelf merchandise like OpenAI’s ChatGPT, Google Bard, Claude, and Synthesia with their functions utilizing APIs. The combination course of is pretty easy, and so is the generative AI pricing (extra on that later). Commercially accessible merchandise are up to date regularly and supply intensive documentation for AI builders. The draw back? Your customization choices shall be restricted, and you’ll closely depend upon an exterior firm for important enterprise duties, like dealing with buyer assist queries or producing visible content material.
  2. Retraining commercially accessible options in your company knowledge. On this situation, your in-house AI staff will choose an present generative AI product developed by a selected vendor, equivalent to OpenAI, and fine-tune it utilizing your personal knowledge. Personalized Gen AI options will higher perceive consumer questions and provide you with extra correct responses. Nevertheless, the seller will nonetheless cost a small price for working your queries, so the ultimate generative AI price will comprise each operational and customization bills.
  3. Utilizing open-source basis fashions “as is.” Exaggeratingly, your organization might select RoBERTa, GPT-2, GPT-Neo, or another open-source mannequin and apply it to enterprise duties like answering buyer emails with out additional coaching. Nevertheless, the price of generative AI shall be decided by the computing sources consumed by the mannequin. Additionally, your Gen AI resolution might underperform when confronted with unfamiliar knowledge and duties.
  4. Retraining open-source fashions in your knowledge. On this case, you may must receive and put together particular knowledge for Gen AI mannequin coaching, present on-premise or cloud servers for mannequin coaching and operations, and proceed to fine-tune and replace the mannequin as your duties evolve. Whereas this bespoke strategy ensures superior mannequin efficiency, it additionally entails larger generative AI prices.

Now that you realize your implementation choices, let’s zoom in on the price of generative AI these choices entail.

Perception into generative AI pricing based mostly on the implementation situation

The price of commercially accessible Gen AI instruments

Off-the-shelf companies that facilitate textual content processing and technology sometimes cost enterprises based mostly on the variety of characters or tokens – i.e., fundamental items of textual content, which might vary from punctuation marks to phrases and different components of syntax – in enter or output textual content.

Here is how this works in apply:

  1. Character-based billing. Some options, equivalent to Gen AI instruments pushed by Google’s Vertex AI, invoice customers based mostly on the variety of characters within the enter and output textual content. They depend every letter, quantity, house, and punctuation mark as a personality. The generative AI pricing for the PaLM 2 for Textual content mannequin supported by Vertex, for example, begins from $0.0005 per 1,000 characters for enter and output textual content (billed individually).
  2. Token-based billing. Extra superior Gen AI instruments have a tendency to interrupt down textual content into tokens as a substitute of characters. Relying on a mannequin’s coaching and processing strategies, a token could be a punctuation mark, a phrase, or a part of a phrase. For instance, OpenAI defines a token as a bunch of roughly 4 characters. A easy sentence like “Tom has introduced Jill flowers.” would thus include eight tokens, because the phrases “introduced” and “flowers” barely exceed the four-character threshold. In terms of the price of such generative AI options, it largely relies on your chosen language mannequin. OpenAI’s GPT-4 Turbo, one of the vital refined instruments available on the market, fees $0.01 per 1,000 tokens for enter textual content and $0.03 per 1,000 tokens for output textual content. For GPT-3.5 Turbo, its older model, the costs are considerably decrease, starting from $0.001 per 1,000 tokens for enter textual content to $0.002 per 1,000 tokens for output textual content. It ought to be famous that completely different generative AI suppliers have completely different notions of characters and tokens. To pick probably the most cost-effective possibility, it is best to research their documentation and plans and think about which product most closely fits your distinctive enterprise wants. For instance, in case your duties revolve round textual content technology reasonably than evaluation, a generative AI service with decrease output charges shall be extra appropriate.

Gen AI companies for visible content material creation, in the meantime, are inclined to cost customers per generated picture, with charges tied to picture measurement and high quality. A single 1024 by 1024 pixels picture produced by DALLE 3 in commonplace high quality would price you $0.04. For bigger photos (10241792 pixels), in addition to high-definition photos, the value would go as much as $0.08-0.12 apiece.

And do not forget about turn-key Gen AI platforms, equivalent to Synthesia.io, which take a extra conventional strategy to pricing. In case your advertising and marketing staff is trying to velocity up the video creation course of, you may attempt the software for as little as $804 per 12 months.

The price of customizing commercially accessible Gen AI merchandise

As you may see from the earlier part, nearly all of ready-made Gen AI merchandise leverage the pay-as-you-go monetization technique.

Whereas their pricing fashions look pretty easy at first look, it could possibly be difficult to foretell what number of queries your staff will run, particularly if you happen to search to discover a number of generative AI use instances in numerous departments.

This brings about confusion concerning Gen AI instruments’ pricing and whole price of possession, because it was within the early days of cloud computing.

One other drawback of utilizing industrial Gen AI options is that general-purpose merchandise like ChatGPT lack contextual data, equivalent to familiarity along with your firm’s construction, merchandise, and companies. This makes it tough to enhance operations like buyer assist and report technology with AI capabilities, even if you happen to grasp immediate engineering.

In response to Eric Lamarre, Senior Accomplice at McKinsey, to unravel this drawback, organizations “must create a knowledge atmosphere that may be consumed by the mannequin.” In different phrases, you may must retrain commercially accessible Gen AI instruments in your company knowledge, in addition to data pulled from exterior sources by way of APIs.

There are two methods to perform the aim – and a number of other components that may impression the price of generative AI in every situation:

  • Utilizing software-as-a-service (SaaS) platforms with generative AI capabilities. Many distinguished SaaS distributors, together with SAP, TIBCO Spotfire, and Salesforce, are rolling out generative AI companies that may be fine-tuned utilizing buyer knowledge. Salesforce, for instance, has launched Einstein Copilot, a conversational AI assistant that pulls proprietary knowledge from Salesforce Information Cloud to craft personalised responses to buyer questions. The knowledge utilized by the clever assistant contains Slack conversations, telemetry, enterprise content material, and different structured and unstructured knowledge. Salesforce shoppers can even create customized AI fashions, abilities, and prompts utilizing Einstein Copilot Studio’s no-code Immediate Builder and Mannequin Builder. As of now, the latter instrument helps OpenAI’s massive language fashions (LLMs), however there are plans to combine the product with different third-party options, together with Amazon Bedrock and Vertex AI. As Einstein Copilot continues to be in its pilot part (no pun supposed), the generative AI pricing data has not but been unveiled. Nevertheless, the price of the generative AI Gross sales GPT assistant, which at the moment totals $50 per consumer per thirty days, might provide you with a basic thought of what to anticipate.
  • Integrating your company software program with Gen AI options over APIs and retraining fashions in your knowledge. To cut back the price of generative AI implementation, you could possibly remove the middleman SaaS instruments, merging your apps straight with industrial Gen AI options on the API stage. For example, if you happen to’re trying to supercharge your buyer assist chatbot with Gen AI capabilities, you may sync it with one in every of OpenAI’s fashions – e.g., GPT-3.5 or GPT-4 – utilizing the OpenAI API. Subsequent, it is advisable to put together your knowledge for machine studying, add the information to OpenAI, and handle the fine-tuning course of utilizing the OpenAI CLI software and Open AI Python Library. Whereas fine-tuning the mannequin, you may be charged $0,008 per 1,000 tokens (GPT-3.5). As soon as your mannequin goes into manufacturing, the enter and output charges will quantity to $0,003 per 1,000 tokens and $0,006 per thousand tokens, respectively. The general price of generative AI may also embody storage prices, offered you select to host your knowledge on OpenAI servers. Information storage bills might add $0.2 per 1GB of knowledge per day to the ultimate estimate. And do not forget the information preparation and mannequin fine-tuning efforts. Except your IT division possesses the required abilities, you may must companion with a dependable AI growth companies firm.

The price of utilizing open-source Gen AI fashions “as is”

Disclaimer: We’re not suggesting that you just construct a customized basis mannequin akin to ChatGPT from the bottom up – that is a enterprise finest left to these with substantial backing, like OpenAI’s assist from Microsoft to offset their $540 million losses.

Much more fundamental basis fashions, like GPT-3, can rack up preliminary coaching and deployment prices exceeding $4 million. Moreover, the complexity of those basis fashions has skyrocketed at an astonishing price lately.


The computing sources required to coach massive AI fashions doubles each 3.5 months. The muse fashions’ complexity is altering, too. For example, in 2016, Bert-Giant was educated with 340 million parameters. Compared, OpenAI’s GPT-3 mannequin was educated with round 175 billion parameters.

The excellent news is that basis fashions are there already, which makes it comparatively simple for companies to begin experimenting with them whereas optimizing generative AI implementation prices.

Basically, we might deal with basis fashions as a toolkit for AI software program engineers since they supply a place to begin for fixing advanced issues whereas nonetheless leaving room for personalization.


We might loosely divide present basis fashions into three classes:

  • Language fashions are designed to deal with textual content translation, technology, and question-answering duties
  • Laptop imaginative and prescient fashions excel at picture classification, object detection, and facial recognition
  • The third class, generative AI fashions, creates content material that resembles the information a mannequin has consumed. This content material might embody new photos, simulations, or, in some instances, textual data.

As soon as you have chosen an open-source mannequin that most accurately fits your wants, you may combine it along with your software program utilizing APIs and make the most of your personal server infrastructure.

This strategy includes the next generative AI prices:

  1. {Hardware} prices. Working AI fashions, particularly massive ones, requires vital computational sources. If your organization lacks the suitable {hardware}, chances are you’ll must put money into highly effective GPUs or CPUs, which could be costly. In case your mannequin is comparatively small, a high-end GPU like an NVIDIA RTX 3080 or comparable might suffice. The price of such a GPU can vary from $700 to $1,500. For big fashions like GPT-2 or comparable, you want a number of high-end GPUs and even specialised AI accelerators. A single NVIDIA A100 GPU, for instance, can price between $10,000 and $20,000. A setup with a number of GPUs can thus price between $30,000 and $50,000.
  2. Cloud computing prices. As a substitute for shopping for {hardware}, you may hire cloud computing sources from suppliers like Amazon Net Providers (AWS), Google Cloud Platform (GCP), or Microsoft Azure. These companies cost based mostly on utilization, so prices will depend upon how a lot you employ their sources by way of computing time and storage. For instance, GPU situations on AWS (like P3 or P4) can price wherever from $3 to $24 per hour, relying on the occasion sort.
  3. Electrical energy and upkeep. In case you use your personal {hardware}, you may incur electrical energy prices for working the machines and probably extra cooling programs. Upkeep prices for {hardware} can even add up.
  4. Integration and deployment. Integrating the AI mannequin into your present programs and deploying it (particularly in a manufacturing atmosphere) would possibly require extra software program growth efforts, which might incur labor prices. The price of outsourcing AI growth to a software program growth firm might vary from $50 to $200 per hour, with whole bills starting from just a few thousand to tens of 1000’s of {dollars}.
  5. Information storage and administration. Storing and managing the information utilized by the mannequin could be expensive, particularly when coping with massive datasets or utilizing cloud storage options. For on-site installations, the price of storing generative AI knowledge might vary from $1,000 to $10,000, relying on the scale of the coaching dataset and redundancy wants. Costs for cloud-based knowledge storage options, like AWS S3, can range from $0.021 to $0.023 per GB per thirty days, with additional prices for operations and knowledge switch.

Finally, how a lot might it price your organization to undertake a generative AI basis mannequin “as is,” deploying it by yourself infrastructure?

For a mid-sized enterprise aiming to make use of a reasonably massive mannequin like GPT-2 on-premises, the related generative AI prices might span:

  • {Hardware}: $20,000-$50,000 (for a few high-end GPUs or a fundamental multi-GPU setup)
  • Electrical energy and upkeep: Round $2,000-$5,000 per 12 months
  • Integration and deployment: $10,000-$30,000 (assuming average integration complexity)
  • Information storage and administration: $5,000-$15,000 (various with knowledge measurement)

The entire price of organising and working a generative AI resolution would come with the next:

  • Preliminary deployment bills: Roughly $37,000 to $100,000 ({hardware} + preliminary integration and storage setup)
  • Recurring bills: $7,000 to $20,000 (together with electrical energy, upkeep, ongoing integration, and knowledge administration prices)

These ballpark estimates can range considerably based mostly on particular necessities, location, and market circumstances. It is all the time finest to seek the advice of with knowledgeable for a extra personalised and correct estimate. Moreover, it is a good suggestion to examine present market charges for {hardware} and cloud companies for probably the most up-to-date costs.

The price of retraining open-source Gen AI options utilizing your knowledge

If your organization is considering adjusting an open-source basis mannequin, it is essential to think about the components that may have an effect on the price of implementing generative AI.

Such components embody:

  1. Mannequin measurement. Bigger fashions, equivalent to GPT-3, require extra sources to fine-tune and deploy. Because of this, the price of generative AI will increase with the scale and complexity of the mannequin. Easier open-source basis fashions like GPT-2, XLNet, and StyleGAN2, in the meantime, can not generate content material with the identical stage of coherence and relevance.
  2. Computational sources. Retraining a basis mannequin utilizing your organization’s knowledge calls for substantial computing energy. The price of a generative AI resolution thus relies on whether or not you are using your personal {hardware} or cloud companies, with the latter’s value various based mostly on the cloud supplier and the dimensions of your operations. In case you go for a less complicated mannequin and deploy it on-premises, you are anticipated to spend $10,000-30,000 in GPU prices to fine-tune the generative AI resolution. With cloud computing, the bills might vary between $1 and $10 per hour, relying on occasion sort. GPT-3-like open-source fashions require a extra superior GPU setup, upwards of $50,000-$100,000. The related cloud computing bills can vary from $10 to $24 per hour for high-end GPU situations.
  3. Information preparation. The method of gathering, cleansing, and getting ready your knowledge for fine-tuning basis fashions could be resource-intensive. The price of generative AI implementation will due to this fact embody the bills related to knowledge storage, processing, and probably buying coaching datasets if your organization lacks your personal knowledge or can not use it for safety and privateness causes.
  4. Growth time and experience. Synthetic intelligence expertise does not come low-cost. A US-based in-house AI engineer will price your organization $70,000-$200,000 yearly, plus the hiring, payroll, social safety, and different administrative bills. You’ll be able to cut back generative AI prices by partnering with an offshore software program engineering firm with AI growth experience. Relying on the situation, such corporations’ hourly charges can vary from $62 to $95 for senior growth expertise in key outsourcing areas, equivalent to Central Europe and Latin America.
  5. Upkeep prices. You may be solely liable for sustaining, updating, and troubleshooting the mannequin, which requires ongoing effort and machine studying engineering and operations (MLOps) experience.

Contemplating the components talked about above, what’s the reasonable price of making a custom-made generative AI resolution based mostly on a available basis mannequin?

For a mid-sized enterprise trying to fine-tune a reasonably massive mannequin like GPT-2, the related generative AI implementation prices might span:

  • {Hardware}: $20,000-$30,000 (for a average GPU setup)
  • Growth: Assuming 6 months of growth time with a mixture of in-house and outsourced expertise:

In-house: $35,000-$100,000 (half-year wage)

Outsourcing: $20,000-$40,000 (assuming 400 hours at a median price of $75/hr)

  • Information preparation: $5,000-$20,000 (various with knowledge measurement and complexity)
  • Upkeep: $5,000-$15,000 per 12 months (ongoing bills)

The entire price of organising and working a generative AI resolution would come with the next:

  • Preliminary deployment bills: Roughly $80,000 to $190,000 (together with {hardware}, growth, and knowledge preparation prices)
  • Recurring bills: $5,000 to $15,000 (upkeep and ongoing prices)

Precise Gen AI growth and implementation prices can range based mostly on particular mission necessities, the supply of coaching knowledge and in-house AI expertise, and the situation of your outsourcing companion. For probably the most correct and present pricing, it is advisable to seek the advice of with professionals or service suppliers straight.

Whereas $190,000 for a generative AI system might sound unreasonably costly, the price of constructing a generative AI resolution utilizing open-source basis fashions is perhaps decrease than choosing a commercially accessible software.

Earlier than ChatGPT gained consideration, Latitude, a pioneering startup liable for the AI-based journey recreation referred to as AI Dungeon, had been using OpenAI’s GPT mannequin for textual content technology.

As their consumer base grew, so did OpenAI’s payments and Amazon infrastructure bills. Sooner or later, the corporate was paying $200,000 per thirty days in related prices to deal with the rising variety of consumer queries.

After switching to a brand new generative AI supplier, the corporate decreased working prices to $100,000 per thirty days and adjusted its monetization technique, introducing a month-to-month subscription for superior AI-powered options.

To pick the best implementation strategy whereas optimizing generative AI pricing, it’s thus essential to totally analyze your mission necessities beforehand. And that is why we all the time encourage our shoppers to kick off their AI growth initiatives with a discovery part.

Issues to think about when implementing Gen AI in enterprise

Now that you realize what to anticipate from generative AI cost-wise, it is time to discuss concerning the know-how’s implementation pitfalls and issues:

  • Basis fashions, particularly massive language fashions, would possibly hallucinate, producing seemingly reputable however totally wrongful solutions to consumer questions. Your organization might keep away from this situation by bettering coaching knowledge, experimenting with completely different mannequin architectures, and introducing efficient consumer suggestions loops.
  • Gen AI options are educated utilizing huge quantities of knowledge that shortly develop into outdated. Because of this, you may must retrain your mannequin often, which will increase the price of generative AI implementation.
  • Basis fashions educated on particular knowledge, equivalent to digital well being report (EHR) entries, would possibly wrestle to provide legitimate content material outdoors of their quick experience. Basic-purpose fashions, alternatively, wrestle with domain-specific consumer queries. Some methods to handle this difficulty embody creating hybrid fashions, tapping into switch studying methods, and fine-tuning the fashions by way of consumer suggestions.
  • Gen AI options are black-box by nature, which means it is seldom clear why they produce sure outcomes and easy methods to consider their accuracy. This lack of awareness would possibly forestall builders from tweaking the fashions. By following explainable AI rules throughout generative AI mannequin coaching, equivalent to introducing mannequin interpretability methods, consideration mechanisms, and audit trails, you may achieve perception into the mannequin’s decision-making course of and optimize its efficiency.

Additionally, there are a number of questions that your organization must reply earlier than getting began with generative AI implementation:

  • Is there a stable purchase vs. construct technique in place to validate that your organization solely adopts generative AI in features the place the know-how would develop into a differentiator whereas stopping vendor lock-in? This technique ought to be augmented with an in depth roadmap for change administration and Gen AI scaling – and provisions for redesigning whole enterprise processes, ought to the necessity come up.
  • Does your in-house IT division possess satisfactory MLOps abilities to check, fine-tune, and preserve the standard of advanced ML fashions and their coaching knowledge? If not, have you ever already chosen a dependable AI growth firm to deal with these duties?
  • Do you will have a considerable quantity of computing sources, each within the cloud and on the sting? Additionally, it is essential to evaluate the scalability of your IT infrastructure in addition to the potential for reusing Gen AI fashions throughout completely different duties, processes, and items.
  • Does your organization or your AI growth companion have the abilities to check the feasibility of Gen AI by way of proof of idea (PoC) and scale your experiments outdoors the managed sandbox atmosphere?
  • Final however not least, does your group have efficient privateness and safety mechanisms to guard delicate data and guarantee compliance with industry- and region-specific rules?

Having a well-thought-out implementation plan is not going to solely assist you to undertake the know-how in a risk-free approach and reap the advantages sooner but additionally cut back the price of generative AI.

Faucet into ITRex generative AI consulting companies to determine whether or not Gen AI will assist you to revamp enterprise processes, choose the best Gen AI implementation strategy, and optimize generative AI prices. Write to us to get the ball rolling!

The publish Calculating the Price of Generative AI appeared first on Datafloq.

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