Short answer
Tokens are the units AI models use to read and write text, roughly three-quarters of an English word each. AI providers meter usage in tokens, and business platforms convert that into credits or usage limits, so the length of prompts, documents and answers drives AI cost.
AI Tokens and Usage Pricing explained
Both input (your prompt and any documents or data) and output (the model's answer) count toward token usage. Larger, more capable models cost more per token than smaller, faster ones. Business products wrap this in their own units: Salesforce Flex Credits, HubSpot credits, or usage limits on Claude and ChatGPT plans.
Budgeting AI means estimating volumes per use case, choosing the right model size, and monitoring usage after launch.
How Vantage Point helps: we estimate AI usage and cost for each use case, choose appropriate models, and set up monitoring and limits.
Frequently asked questions
How many words is a token?
In English, a token averages about three-quarters of a word, so 1,000 tokens is roughly 750 words.
How can we control AI costs?
Use smaller models for simple tasks, trim unnecessary context, cache repeated content where supported, and set usage limits per team.