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AI Chatbot Development – Detailed Features, Cost & Factors

AI Chatbot Development – Detailed Features, Cost & Factors
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    8 min
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    October 16, 2023 Last Updated: February 28, 2024


Needless to say, developing an AI chatbot is a strategic decision that holds significant potential for businesses across various industries. These conversational AI systems are specifically designed to engage with users, answer inquiries, and perform various other tasks. They offer numerous benefits like improved customer service, enhanced user experience, and operational efficiency.

So if you are planning to embark on an AI Chatbot development journey, it is essential to understand the features, costs, and various other factors associated with the same. And yes, most importantly how you can reduce the AI Chatbot development cost.

This blog will take you on a journey where you will get to know each and everything you must know to build a business-specific AI Chatbot like ChatGPT, Google Bard, ChatSpot, Snapchat My AI, and so on.

Market Overview of the AI Powered Chatbot

Before moving ahead with the development, it is essential to know how AI chatbots are adding value to businesses.

Well, if we specifically talk about the AI chatbot industry, it is worth 137.6 million USD in 2023 and is expected to reach 239.2 million USD by 2025.

Apart from this, if we go with the income generated by the chatbot sector in the year 2023, it is about 137.6 million USD. This value is forecasted to generate 454.8 million USD in sales by 2027.

Even if we go with the study from some giants they reveal the true potential of using AI Chatbots

  • According to a report from Chatbot Magazine, utilizing a chatbot to send personalized messages to customers who have abandoned their eCarts without making a purchase can motivate them to close the sale thus increasing the revenue by up to 15%.
  • According to IBM, chatbots save firms’ overall expenditures by up to 30% by taking the place of potential chat support employees.
  • According to research by Drift, 42% of potential buyers used chatbots to make secure online purchases of goods.
  • According to Juniper Research, implementing chatbots for efficient customer assistance would help the insurance industry save up to 1.3 billion USD over the next few years.
  • According to Opus Research, about 4.5 billion USD was spent on the integration of chatbots into different industries for better customer service.

Well, these stats would be enough to prove that investing in AI chatbot development is going to be a win-win strategy for your business.

Want to know how?

Let’s see!

Top 7 Benefits of AI Chatbot

AI chatbots are becoming increasingly popular these days and there are several reasons behind the same. Let’s discuss some of them.

124/7 Availability

Chatbots can run continually, offering assistance and client support even after usual business hours. As a result.customer loyalty and satisfaction increase by a huge margin.


Chatbots can easily automate routine work. This reduces the need for human staff and lowers costs for enterprises.


Natural language processing (NLP) and machine learning (ML) are two techniques that chatbots can utilize to understand and provide customized responses to client questions.


Businesses can scale their customer support operations more easily as chatbots can handle a large number of consumer interactions at once.

5Data Gathering

Chatbots are able to gather information about consumer interactions and preferences. You can utilize this to enhance chatbot functionality and guide corporate decisions.

6High Efficiency

Automating monotonous processes, responding quickly and accurately to customer inquiries, and assisting companies in meaningfully engaging their clientele are all things that chatbots can handle efficiently.

7Multi-Channel Support

Chatbots can offer support through a variety of channels, such as social media and messaging services, making it simpler for the audience to acquire the assistance they require.

Now as you are clear about the advantages that AI chatbots can offer your business. Let’s dive into the development phase.

Top 8 Factors That Affect the Cost of AI Chatbot Development

Well, there is no set price as each Chatbot is unique and is created in response to particular customer requirements and specifications.

Additionally, as it is a multi-step process the cost is impacted by the time and effort required to create a chatbot. But to make it easier for you to understand here are some major factors that affect the cost of AI-powered chatbots.

  • Complexity & Functionality

The cost of developing a chatbot increases with the complexity of its capabilities. For instance, a chatbot with more advanced capability will cost more than one with more basic functionality since it can manage a wider range of consumer inquiries and handle more tasks.

  • Platform Integration

Where the chatbot is integrated will also affect the cost of development. A chatbot that is incorporated into a company’s website, for instance, will probably cost less than one that is incorporated into a mobile app or a third-party platform, like Facebook Messenger.

  • 3rd Party Integrations

The price of developing the chatbot will increase if you integrate it with third-party services like payment processors or CRM systems.

  • User Interface Design & Development

The cost of developing a chatbot with a more complex design and user interface will be more than the one with a simpler design.

  • Update & Maintenance

It’s crucial to take into account the continuing expense of the chatbot’s upkeep and updates. The AI chatbot requires updation on a regular basis to retain its efficacy as technology and client demands change with time. The entire development budget should account for this expense.

  • Data Privacy & Security

Data security and privacy are crucial factors to take into account when designing a chatbot. The cost of development will also depend on the features that you incorporate.

  • Testing

Another thing to consider is the price of testing the chatbot before it is used. To make sure that the chatbot performs as anticipated and satisfies user demands, both functional testing and user acceptance testing demand sufficient time that affects the cost.

  • Transferring Control to Humans

If a chatbot is unable to handle a particular query, it will transfer control to human help. The functionality will add more price to the development cost. Apart from this, there are other such functionalities that can increase the overall AI Chatbot development cost.

Now that you are aware of the major factors that can influence the cost. Let’s move ahead with the features that you can add to the AI Chatbot to make it unique in the competitive market.

Also Read: AI Applications & Use Cases: Revolutionizing Major Industries

Top 7 Must-Have Features of the AI Chatbot

Well, when it comes to the features the list is large. You can add as many features as you desire but adding more features will not only affect the performance but will also hamper the user experience. So in order to outperform your competitors you are required to have limited yet result-oriented features. Here are some of those features you can go with. 

1Omnichannel Messaging Support

A website, Facebook Messenger, WhatsApp, and other channels can all be readily integrated with chatbots that have omnichannel messaging support features to provide seamless consumer contact.  

Brands can benefit from chatbots that provide omnichannel messaging assistance by learning about the interests and preferences of their consumers. This also makes it easier for your customer service representatives to use previous interactions as a springboard for new ones.

2Live Chat Handover

Advanced and intelligent chatbots can manage any kind of client conversation. But occasionally, bots fall short, necessitating human intervention. A well-defined fallback in these circumstances enables the bot to transmit the chat to the appropriate human agent.

Fallbacks must be included for two situations: 

  1. When the bot considers the inquiry to be complex
  2. When users wish to speak with a support representative.

The main goal of the live chat handover is to give clients fallback alternatives to end the conversation with the chatbot or to speak to a live agent when there is an emergency or when they have difficult problems.

3Sentiment Analysis

This is one of the advanced features of AI chatbots that is particularly based on the concept of determining the emotion behind a customer’s message. It’s about mining opinions, thoughts, or sentiments from text or audio data to understand and then influence customer satisfaction levels.

A bot needs to understand the mood of the customer through sentence structures and verbal cues to enhance the value of customer communication. The use of sentiment analysis can add value to your customer service chatbots and ensure a better experience.

AI chatbots can segment audiences depending on customer satisfaction levels and alter responses to match customer sentiments using sentiment analysis. They can aid in the analysis of user data from social media platforms, polls, customer surveys, feedback, and reviews to determine how well people see particular goods or services.

4Chatbot Marketing

Modern chatbots are quite sophisticated and can assist you in automating your marketing. They can assist in promoting goods and services and guiding clients smoothly through the sales process.

Using AI chatbots for marketing can assist your company with a number of marketing tasks, such as placing orders, setting up appointments, following up on orders, sharing updates and news, etc.

Without pushing consumers to visit the website or app, chatbots can help segment the audience and complete orders. They are useful in gathering information to understand the demands of the audience and move potential customers down the sales funnel.

5Chatbot Analytics

Analytics from AI chatbots can help you get to know your customers well and make data-driven decisions. With the help of this function, a company can learn more about its customers and improve decision-making. 

With the chatbot analytics function, you can examine all of the chat interactions that your bot has handled and gain insightful knowledge. It will aid you in determining how accurately customer service bots respond to their requests. 

You can analyze your chatbot’s performance and gauge your company’s expansion by developing a successful chatbot strategy. In addition to monitoring relevant KPIs for chatbots, chatbot analytics are used to understand the client journey and make informed decisions.

6Data Security

You need to understand that Chatbots are not hacker-proof anymore. They are vulnerable to attack because of inadequate security measures, weak coding, or user mistakes, among other things.

Chatbots are becoming extremely widespread in companies that deal with highly sensitive data and individually identifiable information. As a result, they must not be exposed to hacking assaults in order to function at their best.

Threats are one of two categories of security concerns that chatbots are vulnerable to, along with DDoS assaults and malware that can take over your system and demand money. Additionally, hackers can reveal private consumer information or exploit holes in the system. So end-to-end encryption and other security measures are essential.

7Push Notifications

By sending updates, reminders, insights, and promotional messages via push notifications, your chatbot can re-engage users and encourage continuing user interaction.

Also Read: Merging Blockchain and AI, Why Do You Need It in the Near Future?

How Much Does It Cost To Develop A Chatbot ?

It costs $5,000 to $25,000 to create a small chatbot with simple functionality and appearance. Most of these AI chatbots offer straightforward information and respond to frequently requested inquiries. It features a simple design and user interface and can be integrated into a company’s website.

For an intermediate  AI chatbot with more advanced functionality and design costs range from $20k to $50k. This kind of chatbot can manage various jobs and carry out more sophisticated operations, in addition to having more complicated capabilities. You can incorporate it into third-party systems like Facebook Messenger, which might have a more complex design and user interface or mobile apps.

Advanced chatbot functionality, designs, and integrations typically cost $50,000 or more. This kind of chatbot typically responds to a variety of customer inquiries and is multifunctional. It might have a very swanky look and interface and can be incorporated into a variety of platforms and third-party systems like CRMs and payment processors. Analytics will also be available in addition to NLP and ML.

How To Reduce The Overall AI Chatbot Development Cost?

There are various strategies for lowering the price of developing a chatbot for your company. Here are some suggestions to get you going:

  • Employ Chatbot Builders

If the needs for the chatbot are straightforward, a chatbot builder can be the most affordable choice. Compared to custom programming, chatbot builders are frequently more economical and require less technical expertise.

  • Prioritize Your Specific Market

When creating a chatbot, concentrate on your target audience and their needs rather than attempting to simultaneously serve all users from various languages and geographical locations. With this strategy, you may develop a tool that best serves your audience and enhance it over time as they grow accustomed to it.

  • Utilize Free Resources

Consider using services like Microsoft Azure Cognitive Services Image Classification or Google Cloud AutoML Vision.

Additionally, a variety of third-party services, such as Natural Language Processing APIs (NLP), Machine Learning APIs (ML), and Image Recognition APIs (IR), are available that can assist in making your chatbot creation more accessible. These services offer prebuilt components. You can easily incorporate these components into any chatbot project without the need to create them from scratch. This saves both time and money on chatbots.

Note: You can also talk to our experts regarding further cost-cutting while maintaining the quality.

How Can Blocktunix Help You in Your AI Chatbot Development Journey?

With blockchain-based AI apps, Blocktunix provides end-to-end AI chatbot development services as well as business strategy, user interface design, integration of natural language processing (NLP), annotation of data, and dataset management.

Additionally, we offer ongoing maintenance and support to ensure the chatbot can answer user requests and coordinate with the online portal. By delivering high-quality, user-friendly AI development solutions, we help organizations improve customer service, boost engagement, and drive growth.

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