What is Token?
A token is the basic unit of text that AI language models process, roughly equivalent to a word or part of a word.
The full picture
When AI models like ChatGPT read or generate text, they break everything down into tokens. A token might be a whole word like 'business,' part of a word like 'ing,' or even a punctuation mark. On average, one token equals about 0.75 words in English, so 100 words typically equals around 133 tokens.
Tokens matter for your business because AI companies charge by the token. Every message you send and every response you receive counts toward your token usage. If you're running chatbots, generating marketing content, or analyzing customer feedback with AI, understanding tokens helps you predict costs and budget appropriately. Services that seem cheap per token can add up quickly with heavy usage.
For example, if you send a 500-word product description to an AI for rewriting, that's roughly 665 tokens input. The AI's 600-word response adds another 800 tokens. At $0.002 per thousand tokens, that single request costs about $0.003. But multiply this across thousands of daily customer interactions, and monthly costs become significant—turning token awareness into a business necessity.
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