AI Foundation

Tokens & pricing

Now that we understand how AI models work at a high level, let's dive into something that will help you understand both how these models think and how much they cost to use: tokens.

You can think of tokens like the "words" that AI models actually understand. But here's the thing — they're not quite the same as the words you and I would use. Just like how your computer doesn't actually understand the letter "A" but instead works with binary code (1s and 0s), AI models don't work directly with words like "hello" or "world" either.

Instead, they break everything down into smaller chunks called tokens. For example, the word "hello" might be one token, but the word "understanding" could be broken into multiple tokens like "under", "stand", and "ing". Sometimes even parts of words, punctuation, or spaces become their own tokens.