AI Cost Calculators

Ai Glossary — Key Terms Explained

Token

The basic unit used by language models to process text. Approximately 4 characters or ¾ of a word in English. '1,000 tokens ≈ 750 words'. Pricing for AI APIs is typically per 1 million tokens for input and output separately.

Input vs Output Tokens

Most AI API providers charge differently for input tokens (text you send to the model) and output tokens (text the model generates). Output tokens are typically 3–5× more expensive than input tokens. Optimise prompts to minimise output verbosity.

Context Window

The maximum number of tokens a model can process at once — including both input and output. GPT-4o has a 128k token context window (≈ 96,000 words). Larger context windows cost more but allow processing entire documents.

LLM (Large Language Model)

An AI model trained on vast text datasets to understand and generate human language. Examples: GPT-4o (OpenAI), Claude (Anthropic), Gemini (Google), Llama (Meta). Accessed via API for integration into applications.

RAG (Retrieval-Augmented Generation)

An AI architecture that retrieves relevant documents from a knowledge base before generating a response. Reduces hallucination and allows using private data without fine-tuning. Increases token usage and cost per query.