Somebody wisely said that the first impression is the last impression. That remains true for most businesses and startups today. This is because the interaction between a prospect and the company starts with a conversation. Depending on that first conversation, the prospect decides whether to become a customer or not. The first conversation is the road to making a good impression.

To ensure that the first impression is good, thousands of businesses worldwide are looking out for artificial intelligence chatbot or AI chatbot development services.

The AI-based chatbots are more advanced than traditional live chat applications. These advanced chatbots enable enhanced interaction with visitors and answer their queries like a human. It eliminates the hiring of a dedicated support agent who has to answer even the common queries on an individual basis.

The adoption of an AI-based chatbot started to rise in the past few years when the social media giant Facebook experimented with its use across the Messenger application. It worked well for Facebook, and then many other apps and businesses explored its use cases for their benefits.

Omnichannel businesses and retailers witness a great experience with these chatbots as they have multiple business channels and want to offer the same experience across all channels.

Businesses are realizing the AI chatbot benefits in terms of increasing lead generation, improving customer support, boosting sales, and much more.

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In fact, Gartner says that over 70% of professional workers will communicate with AI chatbot platforms daily by 2022. Cognizant reports that the chatbot market worldwide will reach $1.3 billion by 2025, experiencing a growth of 24% CAGR.

During COVID-19, when most businesses were looking to reduce their operational costs using automation, plenty opted for Artificial intelligence-powered chatbots.

But, a couple of common questions for many businesses today are how to develop an AI chatbot and how much it costs to develop a custom AI chatbot app.

In this article, we have discussed everything from what is an AI chatbot, its features, and benefits to AI chatbot pricing.

What is AI Chatbot?

AI chatbots are actually applications or software based on artificial intelligence technology that can be used to chat with people in natural language. These chatbots are generally used on mecps, etc.

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The AI chatbots are different from conventional rule-based chatbots. While rule-based chatbots run on the basis of defined and programmed rules, artificial intelligence chatbots learn from the accessible data on their own, using natural language processing (NLP). The more data these chatbots can access, the more intelligent they get with time.

How AI Chatbots Work?

These smart chatbots perform two tasks. The first one is to analyze the requests of the users. Second, after analysis, respond accordingly.

Analyzing user requests

When a user puts in his query, the chatbot first analyzes it. With this analysis, the chatbot understands what the user is asking or looking for. It is a crucial task because if the user intent can’t be understood, it will be difficult to respond correctly.

Read Also: Chatbot Business Model: How to Start a Chatbot Business?

Responding to user

Once the chatbot identifies the user intent, it will then return the response that is most appropriate. To return the right answer, it uses natural language processing.

The answer depends on the data it has access to, such as data stored in systems, previous chats, knowledgebase analysis, or the pre-defined answers. As it interacts with more users, it becomes smarter and responds more conveniently.

Benefits of AI Chatbot

Before diving into critical features and the cost of development, let’s first learn what are the benefits of implementing an AI chatbot for businesses.

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Reduced operational cost

Incoming calls and chat queries involve high operational costs as businesses need to hire dedicated support staff for this purpose. Chatbots can operate efficiently and handle numerous chats at a time without the involvement of a team. This can significantly save operational costs for businesses.

Additionally, when a customer calls sales or other teams after having a chat with a chatbot, the time required in conversation will be reduced, which will further save the time of teams.

Less expensive than the annual salary of employees

Chatbot development involves one-time development costs and maintenance. On the other hand, the employees handling the customers via chat are paid salary on a monthly basis.

Large enterprises that handle hundreds of queries each day need to employ a big team of support executives. A chatbot can handle all the chats alone and cut down labor expenses.

24×7 availability

Customers nowadays expect businesses to offer 24×7 support to them. Not all companies can maintain availability 24 hours a day. This is all the more important for businesses dealing with customers from different time zones.

A chatbot can work all the time, whether it is day or night. This not only improves the customer experience but is also great for converting more prospects into clients.

Effective resource allocation

In many instances, the sales team also needs to spend their time answering customer queries. When a chatbot takes care of these queries and sales-related chats, the sales team can focus more on their core tasks rather than wasting time on mundane and repetitive tasks.

Increased revenue

Many businesses around the globe have implemented AI chatbots and have seen a rise in their annual revenue. Along with offering customer service and upselling/cross-selling services, the chatbots can also send alerts to customers about ongoing promos and discounts. As a result, businesses can onboard more customers, sell more services, and increase their revenue.

Key Factors to Consider Before Developing AI Chatbot

Before choosing AI chatbot development company, you have to consider a number of crucial factors, as described below:

Find the purpose of the chatbot

How can a chatbot benefit your business? What are the key challenges that it can address?

Before developing a chatbot, you have to find its purpose. It will be a great option if:

  • A lot of time of the teams is spent on routine and repetitive tasks
  • There are so many common queries
  • Your customers ask questions in multiple languages
  • Your business is multichannel or omnichannel
  • Customers need 24/7 support when you are limited to specific working hours
  • You want to bring more leads
  • You have a limited number of support staff
  • Your support costs are increasing significantly

In case of these challenges, going for an AI chatbot can prove to be fruitful. For example, a customer service executive can’t answer in multiple languages. AI chatbots are intelligent and innovative. They are not limited to a single language. Depending on the data, it will respond to customer queries, regardless of the language.

Frameworks or development platforms

Once you have found the purpose and identified the opportunities for a chatbot, you have to decide what to use for development. You can build an AI chatbot with non-coding development platforms, as well as code-based frameworks.

Non-coding development platforms like Chatfuel and Botsify help you to get things done faster. In terms of customizations, you might have certain limitations depending on the platform chosen by you.

Read Also: How to Form a Great Mobile App Development Team That Deliver Success?

On the other hand, you can choose code-based development frameworks for AI chatbots, such as Microsoft Bot Framework, Facebook’s, and Google Dialogflow. These frameworks offer more integrations, scalability, access to open-source libraries, and more.

Required features

The features of an AI chatbot should fulfill all your requirements. Once you have identified your current challenges, it is time to create a list of features that can address those challenges.

We will further discuss the essential AI-based chatbot features that can help you develop an excellent and smart sales and support tool.

Goals with AI chatbot

Of course, you have some goals to accomplish and some challenges to address with an AI chatbot. Be clear about your goals so that once you implement the system powered by artificial intelligence technology, it becomes easier for you to understand and analyze whether the chatbot is helping you achieve your goals.

Conversation logics

To define conversation logics with the end-users, you have to create a number of flows, predict frequently asked questions (FAQs), and perform some tests. You should also allow access to your previous conversations and create hypothetical interactions with customers. This is an essential step for sketching out logic.

Once you are done with creating the conversation logic, add this logic to the chatbot in the form of modules. This step will build a flow for the upcoming conversations.

Furthermore, you can also let the AI chatbot access your customer data, preferences, and other relevant information for improved conversations.

AI Chatbot Features

An efficient AI chatbot must have the following features:


Without any questions, the AI chatbot must be truly conversational. It is the core functionality that uses advanced natural language processing tactics to initiate human-like conversations with customers.

It should answer almost every query, right from a formal ‘Hi’, or ‘How are you?’ to complicated questions. It should not just answer common questions but also hold real conversations like a support executive. An engaging conversation will certainly enhance customer experience and positively impact the bottom line of the business.

Additionally, the chatbot must be able to understand the intent of the user, whether it is a complex question or an FAQ. For companies operating in multiple local areas where people prefer local languages, the chatbot should be able to converse in native languages as well.


It should follow an omnichannel approach, which means the chatbot should allow you to integrate it with multiple channels of a business. When the AI chatbot follows an omnichannel approach, it unifies the conversations across all channels, including websites, social media, mobile apps, or instant messaging apps.

Suppose a customer who had a live chat on the website comes to Facebook Messenger after seeing a sponsored ad on Facebook. In that case, the chatbot must understand the replies from previous conversations on the website and talk to the customer accordingly. This makes people feel that you remember them and pay attention to things.

To sum up the omnichannel approach, it can be said that AI chatbot should work well with the following platforms:

  • Live chat on the website
  • Facebook Messenger
  • Mobile app messenger
  • Telegram
  • WhatsApp

User experience (UX)

The UX of the chatbot should look conversational, making the users feel like they are interacting with it. Conversational UX with a great experience is crucial to driving the conversation. AI chatbot UX must have multiple onboarding sequences, exit options, fallback scenarios, sharing and virality, and a seamless chat experience.

The fonts and colors chosen should be user-friendly so that users feel comfortable during the chat. You can also show some readymade text templates for users so that they don’t have to type everything manually.

Recommended Read: Top AI Development Companies


Brands invest in custom AI chatbot development services for a reason. If multiple websites have similar chatbots, it will not look impactful. Your chatbot should have a custom and personalized design to show your business as a brand. Avoid common user interfaces that are already being used by hundreds of other businesses.

You can go for custom AI app development companies for branding and a better user experience. Whether it is about icons, emoticons, media, widget appearance, or full-page appearance, everything should be personalized.

Sentiment analysis

Sentiment analysis in an AI chatbot app is powered by machine learning and natural language processing. What it does is understand the sentiments and emotions of the users during a chat, such as thoughts, views, anger, happiness, fear, sadness, disappointment, curiosity, etc.

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This is important in chatbots for human-like conversations because automated responses for every chat can frustrate the users. For example, if a customer is angry and the chatbot replies in a computerized, cool manner, it can raise his anger further. This is why the chatbot should be able to analyze the sentiment and frame the replies accordingly.

The working of sentiment analysis takes place in a number of steps. First, it checks the intensity of the emotions and assigns a numerical value for the chat. Once this is done, it classifies the responses and creates a reaction based on the emotion score.

For example, if a customer is satisfied with the services, the chatbot can measure it and suggest more services, and drive additional sales. If the customer sounds angry or sad, the chatbot can transfer the chat to a salesperson or live support staff.

Read Also: Use of AI & ML in Everyday Life Brings Future to the Present

Analytics and Reporting

To improve your chatbot, you first have to measure things. Analytics and reporting come into play here by showing critical insights and metrics related to chatbot usage.

Your AI chatbot must exhibit features for analytics that you can see through a custom dashboard in the backend and monitor many metrics, including engagement rate, retention rate, drop-off metrics, funnels, and more.

All these metrics will help you to improve the user experience. You can also learn about the times when users abandoned the chat and find the reasons behind it.

For further improvement, you can also conduct surveys through the chatbot to find the opinions of the users who are actually conversing with the chatbot. The survey forms should be simple and easy to answer so that users don’t feel like skipping things.

Security and privacy

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Securing the data and protecting user privacy should be a high priority. Before initiating the chat, the users fill in their personal details like name, contact number, or email address, which should be kept secure.

AI chatbots must exhibit essential cybersecurity and privacy features that can enable robust security.

AI Chatbot Development Cost

Now that we have discussed it all— what is AI chatbot, market stats, working, benefits, and crucial features, let’s jump to the final thing. How much does it cost to develop an AI chatbot? This is a common question among businesses looking for AI chatbot app development.

The total AI chatbot cost depends on the business concept, required features, development process, development company, and tech stack. Let’s break down things and calculate the average price.

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The communication interface and its integration with your website or app can take up to 50 hours, depending on the complexity and designs. Development of natural language UI and command language interpreter can take somewhere around 70 to 100 hours. To allow access to existing conversations and business data will need the development of a business logic, which takes approximately 30 to 50 hours. Overall, the custom AI chatbot development will consume nearly 200 to 250 hours.

Based on the hours, the approximate cost for development, design, and integration will be between $5,000 to $15,000. You may also need to pay a monthly fee for maintenance.

Wrapping up

Hope this article helped you learn more about AI powered chatbots, their benefits, features, as well as the cost of AI chatbot development. These chatbots perform well for businesses across all industries, help save costs and time, and increase revenue. The benefits justify the cost of development.

For any queries related to AI chatbot development services, you can get in touch with us using the comments section below.

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Design Team Lead

What sets Jitendra apart as a tech blogger is his dedication to staying informed and up-to-date with the ever-changing landscape of technology. He constantly keeps his finger on the pulse of the industry, researching and exploring new advancements to provide his readers with accurate and timely information.

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