Implementation of AI-based solutions in business is a clever conception or simply the key to success for many businesses. It's so much easier to promote your business, reach a wider audience, and generally be competitive. But how much does it cost to bring it to life?
Understanding the components of AI costs
One of the biggest “pain point” misconceptions about AI is that its popularity makes it affordable and easy to achieve. While AI-based software is widely used in many business operations, it is difficult and time-consuming to develop, and therefore expensive.
Hardware costs
The preeminent cloud platforms that are generally used to deploy and manage AI systems are AWS (Amazon Web Services), Microsoft Azure, and Google Cloud Platform.
Let’s assess the key differences:
AWS | Azure | GCP | |
Launching year | 2004 | 2010 | 2008 |
Availability | 84 availability zones & 23 geographical locations | 60+ regions across the country | 24 regions & 74 total zones |
Services | 212+ services | 200+ services | 100+ services |
Cloud share | 33% of the market | 21% of the market | 8% of the market |
Compute engine | EC2 (Elastic Compute System) | Virtual machine | Compute engine |
Networking | Virtual private cloud | Virtual network (VNET) | Cloud virtual network |
Clients | Netflix, BMW, Samsung | HP, Apple, Honeywell | New York Times, Toyota, Spotify |
Pricing | Per hour | Per minute | Per minute |
Cloud infrastructure from these popular 2024 vendors gives access to powerful resources - GPUs, TPUs, and other high-performance computing devices. All three major cloud service providers, AWS, Azure, and GCP, offer reliable services, making them the best options in the cloud computing market. Ultimately, the choice between these three depends on specific business needs, preferences, and existing technology stacks.
Incidentally speaking, indebted to advances in chips and increased manufacturing scale, the cost of AI hardware has come down a bit. Which means that even small businesses and small startups now have the ability to take advantage of these powerful GPUs, TPUs and other resources to deploy their AI models at a more affordable price.
Somehow or other, the cost of cloud computing for AI is not fixed, and may vary, depending on such factors:
- Equipment configuration;
- Duration of use;
- Availability of discounts or volume commitments.
Hourly artificial intelligence pricing for GPU instances starts from $0.50 to $10, and TPU usage from $2 to $40 per hour.
Software costs
In recent years, the AI software landscape has become not only diverse, but also cost-effective AI. Initial investments have dropped significantly, as many popular open-source frameworks (TensorFlow, PyTorch, and Keras), have become available royalty-free.
But to accelerate model development, deployment, and management, organizations can still pay for commercial enterprise AI platforms, tools, and services. As for subscriptions, the typical AI software cost will depend on the level of functionality and support required. It ranges from $1,000 to $100,000 per month.
Examples of such platforms:
Platform type | Examples | Cost per month |
Machine learning services from cloud providers | AWS, Azure, Google Cloud | $1,000 to $100,000+ per month. |
Specialized AI platforms | Dataiku, H2O.AI, Domino Data Lab | $5,000 to $50,000+ per month |
Readily available toolkits for model development and deployment | IBM Watson Studio, Dataiku DSS, Amazon Sage Maker | $1,000 to $10,000+ per month |
Data costs
Since high-quality and relevant datasets are imperative for AI, the costs associated with them can be quite high. Especially for specialized fields: their acquisition will require significant investments. In 2024, the average cost of AI data acquisition and preparation can range from $10,000 for a small pilot project to $1 million for a large-scale one.
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AI development and implementation costs
IDC, a leading provider of market intelligence, predicts that global AI spending will reach $110 billion in 2024, a 28% increase from 2023. The largest growth is expected in financial services, retail, and healthcare.
Development costs
Developing AI-based solutions costs ranges from hundreds of thousands to tens of millions of dollars, depending on the scale, complexity and specifics of the project.
Factors affecting cost of AI development:
- Data collection and management: AI uses large data sets to make accurate predictions and decisions. This includes the cost of collecting, storing, and processing data.
- User interface (UI) and experience (UX) design: Creating intuitive and attractive user interfaces for AI applications is essential for adoption and user satisfaction.
- Algorithm development and training: AI requires significant investments in research, computing resources, and expertise.
- Deployment and infrastructure: The cost of deploying AI solutions and the necessary infrastructure, such as cloud services or on-premises servers, can vary depending on the scope and complexity of the implementation.
- Regulatory compliance: Ensuring that AI applications comply with industry standards and privacy regulations increases costs.
- Scalability and maintenance: Ongoing costs include scaling AI solutions to handle growing data and user loads, as well as maintaining and updating systems to keep them efficient and up-to-date.
Implementation costs
Once an AI system is developed, there are additional costs associated with implementing and deploying it. The cost of implementing and operating AI solutions can be 50-200% of the initial development costs, depending on the scale, complexity, and support requirements.
What exactly does this include?
- Hardware and infrastructure: Servers, storage, and networking equipment are needed to run the AI system.
- Integration: Integrate and deploy the AI system with existing systems and processes
- Training and change management: Train end users and stakeholders on how to effectively use the AI system.
- Scalability and maintenance: Ongoing costs include scaling AI solutions to handle growing data and user loads, as well as mAI ntAI ning and updating systems to keep them efficient and up-to-date.
It’s unequivocally necessary to calculate the cost of AI development services as accurately as possible in advance, so that you don't waste time searching for a development team and get frustrated when the total cost of the project doesn't fit your budget.
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Cost breakdown by AI solutions
Natural language processing (NLP)
The cost of developing NLP models makes $50K to $500K depending on complexity and scalability, meanwhile integration with existing systems is $10K to $100K. Monthly hosting and technical support costs will be around $1K to $10K.
NLP category | Example use case | Pricing |
Classification of text | Automatically triage customer support requests in Amazon Comprehend | $0.10-$1.00 per 1,000 text units; For 10,000 queries per day - $30-$300 per month |
Data extraction | Autocomplete forms from documents in Google Cloud Document AI | $0.60 per 1,000 pages; For 5,000 pages per month, about $3 |
Translation | Automatically migrate your corporate website to Azure Cognitive Services | $10-$400 per month depending on volume; For 1 million characters - ~$100 |
Text generation | Creating product descriptions using GPT-3 in Azure | $0.12-$0.60 per 1,000 tokens; For 1 million tokens - $120-$600 per month |
Computer vision
Development of CV models will cost from $100K to $1M, and integration with hardware (cameras, sensors) from $20K to $200K. Monthly hosting and technical support costs will range from $2K to $20K.
Computer vision category | Cloud service | Example use case | Pricing |
Image classification | Amazon Rekognition | Automatically categorize images by content (e.g. identify animals, objects, scenes) | $1.00 per 1,000 images processed |
Object detection | Azure Computer Vision | Detect and locate multiple objects within an image | $1.00 per 1,000 images |
Optical character recognition (OCR) | Google Cloud Vision API | Extract text from images (e.g. document scanning, license plate reading) | $1.50 per 1,000 images |
Facial recognition | Amazon Rekognition | Detect, analyze and compare faces in images | $1.00 per 1,000 faces detected |
Predictive analytics
Predictive model development costs $75K to $750K, and integration with business data: $25K to $250K. Hosting and technical support costs $5K to $50K monthly.
Service | Capabilities | Pricing |
Amazon SageMaker | Automated model tuning; Built-in algorithms; Model deployment to production. | $1/hour for notebooks; $0.10-$10/hour for training |
Google Cloud AI platform | Pre-trained models; Custom model training; Batch and online predictions. | $0.30-$8/hour for training/predictions; $0.40-$4 per 100 API calls |
Azure Machine Learning | Automated model selection; Visual model building; Secure model deployment. | $0.10-$10/hour for compute; $0.50-$2 per 1000 API calls |
IBM Watson Studio | Support for open-source; Collaborative notebooks; Visual modeling tools. | $0.40-$3.20/hour for runtimes; $0.20-$1 per 1000 API calls |
Databricks | Scalable Spark clusters; ML model training and deployment; Integrated notebooks. | $0.20-$6/hour for clusters; $0.10-$1 per GB of data |
Robotic process automation (RPA)
Typical cost to implement RPA bots: $20,000 to $200,000, depending on scale. Integration with business applications: $10K to $100K, plus monthly licensing and support costs: $1K to $10K.
Service | Capabilities | Pricing |
UiPath RPA | Automated task capture and bot creation; Integrated Development Environment; Attended and unattended automation. | $6,000 - $15,000 per bot annually; Enterprise licenses start at $20,000/year |
Automation Anywhere | Digital workforce management; Intelligent automation with AI/ML; Process discovery and optimization. | $5,000 - $10,000 per bot; Enterprise edition starts at $30,000/year |
Blue Prism | Scalable and secure RPA platform; Drag-and-drop bot creation; Real-time process analytics. | $5,000 - $10,000 per bot annually |
Microsoft Power Automate | Low-code bot building; Integration with Microsoft 365 ecosystem. | $15 - $40 per user/month |
Google Cloud RPA | Serverless RPA with no infrastructure setup; Pre-built connectors for SaaS apps. | $0.20 - $1.00 per bot runtime hour; No upfront license fees |
Cloud vs. on-premises AI solutions
Incessantly, more companies are turning to cloud solutions to improve operational efficiency. They’re often used to improve and simplify their operations. Cloud solutions consist of software, applications, and tools that are stored on servers and accessed over the Internet. By storing data and running applications on servers or personal devices, users can access everything they need from anywhere they have an internet connection.
Here's what makes cloud solutions so attractive:
- Cost-effective: With cloud services, you only pay for what you use, eliminating hardware and software costs. You don't need an IT team to maintain them.
- Scale on demand: You can easily scale your resources to meet the needs of your business. Whether you need to scale up or down.
- Improve collaboration: Cloud applications are accessed over the Internet, making team collaboration seamless regardless of location.
- Automatic updates: Providers take care of updating cloud solutions, so you always have the latest features and security updates without having to do anything.
Choosing between cloud and on-premises storage is an important financial decision for businesses. Both options have their advantages, but cost is often a major consideration. Let's take a look at a cost comparison of cloud and on-premises solutions to see which one offers the best bang for the buck.
Key benefits | Major cloud AI service providers | What the price includes | |
Cloud-based AI | Scalability - the ability to flexibly increase or decrease resources; Pay-as-you-go model - no high initial investment; Shifting responsibility for support and upgrades to the cloud provider. | AWS (Amazon Web Services); Microsoft Azure;Google Cloud AI; | Payment for capacity utilization, data storage, traffic transmission, etc. |
On-premises AI | Full control over data, its storage, and use; Ability to fine-tune and customize solutions for business specifics; Potentially lower total cost of ownership in the long term. | NVIDIA DGX systems; Intel Nervana processors | Higher upfront capital expenditure and ongoing maintenance and upgrade costs, as well as the need for dedicated IT staff. |
Depending on your organization's specific needs, you can choose between cloud-based or on-premises AI solutions. A thorough cost-benefit analysis will help you determine the best option.
Factors influencing AI costs in 2024
In 2024, a number of factors will influence the cost of AI development. Available data is expected to increase, but ensuring data quality will remain costly. The cost of computing hardware will decrease, but energy and cooling costs will remain high. Investment in developing complex AI models will increase, but open-source technologies will help reduce software costs. The shortage of AI specialists will continue, requiring large investments in personnel. Increased AI regulation will lead to additional investment.
How to choose the right AI development partner
If you’ve settled on developing or implementing AI in your business, you need to focus closely on a few important aspects.
As a first step, assess the partner's team's experience and competence in the AI development services they provide, making sure they have demonstrated real achievement in implementing similar projects. Continuing, pay attention to how the potential partner approaches ethical issues and transparency in AI. It’s critical that they have a clear position on minimizing risk. Finally, you should pay attention to the partner's overall approach to development and check how well they live up to the expected requirements for the AI system development process.
And representing Codica, we’re happy to say that as a company with 9 years of experience in custom software development services and more than 50 successful projects, we can be your reliable partner. The extensive portfolio of Codica’s successful projects can be viewed in our portfolio.
Tell us about your project idea, and we'll figure out how to make it happen. Get in touch with us.
Conclusion
Integrating AI into your business is as much a necessity today as creating a corporate website was 10 years ago. Whoever does it will gain a competitive advantage and be able to evolve. Everyone else will be left behind in the new Web 3.0 era and eventually go out of business. Intelligent chatbots, recommendation engines, self-learning information analysis systems, and other AI-based solutions offer too many benefits for businesses to ignore.
Implementing AI solutions in 2024 is quite expensive, but it merits pondering that it’s an investment and should not be seen as a luxury but as a tool that brings benefits. From our standpoint, we always help the client to evaluate the effectiveness of investments and don’t undertake projects that are obviously unprofitable.
The future trends of AI in software engineering are expected to make the field become more transparent, autonomous, collaborative, and user-friendly. These trends signify a shift towards a future where AI is an integral and seamless part of the software development lifecycle.