I’m looking to better understand the chatbot business model. There are a lot of companies out there, some that offer full development, others that offer platforms, etc. The research paper should provide an overview of the market (i.e. the differen...

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I’m looking to better understand the chatbot business model. There are a lot of companies out there, some that offer full development, others that offer platforms, etc. The research paper should provide an overview of the market (i.e. the different types of companies that exist) and the different business models that exist, together with examples of prices from some of the largest players.

Chatbot business models can broadly be categorized into three groups. The first group includes companies that offer platforms for bot developments. This group is dominated by technology giants like Microsoft, IBM, and Google. The second group includes vendors who offer full development, i.e. end-to-end development. This is a fragmented group and can be categorized into four classes. Some players include Nuance, nextIT, Kore etc. The third group includes self-service solution providers like Botsify or Chatfuel. They provide easy to use tools for small businesses to create a bot in the shortest possible time.
The pricing of companies providing platforms are available and is usually based on the basis of an instance and resource use. The pricing of end-to-end development companies are not available but for some of them, we have the client list available. The pricing of self-service bot development companies are available and are usually based on per user per month basis.
There are also bots which are built around solving a problem. Some of them are like Butter.ai which are integrating workspaces or like Digits.ai which are helping people save money or like x.ai which is a scheduling assistant. These companies are not part of our research as our research criteria are restricted to Chatbots and its development enabling companies involved.
We will now discuss each of these groups with few examples of companies and their pricing model.

Chatbot Platforms

This group includes companies which have built an API, SDK, or a library for bots so that the bots can use the capabilities of Machine Learning and Natural Language Processing. These are the building blocks for the bot development and can be provided by the API. The companies which own some of such platforms are IBM Watson, Microsoft Bot Framework, Wit.ai (open source), and api.ai (Dialogflow) now acquired by Google. We will now discuss in brief about these companies and will also discuss the pricing plan for each of them.

IBM Watson

Some of the biggest in the industry prefer IBM Watson which is the first choice of 61% of the businesses for building their bots. Conversation and Virtual Agent are its two important services which currently support English and Japanese. It provides developer tools like Node SDK, Java SDK, Python SDK, iOS SDK, and Unity SDK. It has free and paid plans for the service. Watson provides a free plan which is capped at 10,000 free API calls. Its standard service starts with $0.0025/API call. The pricing plan for Watson Virtual Agent starts from $265 per month which starts after a 30 days trial period.

Microsoft Bot Framework

41% of the businesses prefer Microsoft Bot Framework. The entire framework consists of three parts which are Bot Connector, Developer Portal, and Bot Directory. It supports automatic translation into more than 30 languages. It provides several SDKs like C# SDK, Python SDK, Node JS SDK, and Android SDK. The framework also incorporates LUIS (Language Understanding Intelligent Service) which uses intent and entities. The pricing for Azure Bot Service, which is used to reach customers across multiple channels, is free up to 10,000 messages per month on Premium channels. After that, it charges $0.50 per 1,000 messages which is equivalent to $0.0005 per message.

Wit.ai

45% of businesses had wit.ai as the most trusted bot-building platform. It is used by more than 100,000 developers and supports around 50 languages. It incorporates natural language processing (NLP) and allows using entities, intents, contexts, and actions. Wit is completely free including for commercial use and thrives in the community of developers.

Api.ai (or Dialogflow)

A conversational platform for bots which matches the query to the most suitable intent which will be based on the information contained in the intent. It supports 13 languages and was bought by Google in Sept 2016. Dialogflow provides standard edition, which is completely free and provides the same features as that of Enterprise edition, but with limited quotas for usage and limited support. The enterprise edition provides text interactions at $0.002 per request and voice interaction at $0.0065 per request.
This comparative spreadsheet provides the comparison of all the 25 Chatbots platforms.

End-to-end Development companies

These are companies which are hired by enterprises to build their customized bots. They can be classified into 4 distinct classes. These are customer service experts (Nuance), Robotic Process Automation companies, Pure Chatbot players from 2000s (nextIT), and Pure end-to-end Chatbot providers (KORE)

Some major players in the end-to-end development companies group are:

Nuance

Nuance, which is one of the oldest (founded in 1992) and the established player, provides voice authentication and call center software. As one of the oldest players in the industry, it has the advantage of business relationships and data. Its Chatbot Nina has clients like Coca-Cola and ING Netherlands. The pricing plan for Nuance is not available.

nextIT

It is one of the oldest vendors which solely focus on chatbots. It has many clients in Fortune 1000 companies across different sectors. It has got two major solutions which include Integrated AI solutions and Intelligent Virtual Assistance. The pricing plan for the nextIT is not available.

MindMeld

MindMeld, now acquired by Cisco has many Fortune 500 clients. It provides Deep-Domain Conversational AI which powers its voice and chats assistant. It's pricing though not available, varies with the volume of user queries.
Some other leading players include inbeta, Personetics, creativevirtual, Nano rep, pypestream, and ubisend. A complete list of end-to-end Chatbot solutions providers is available at this link.

self-service solution providers

Self-service solution providers are vendors who provide a platform to build bot using simple Graphical User Interface (GUI). These providers are building platforms for people who don't have any coding skills. Most of these players follow the freemium model.
Some of these players include Manychat (price starts from $10 for 500 subscribers), Botsify (price starts from $10 per month), and Chatfuel (360,000 chatbots, serving more than 17 million users globally. Chatfuel supports about 50 languages, and it is free.) The pro version of Chatfuel starts at $30.

Conclusion

Chatbot Business models can be classified into three groups which are Chatbot platform providers, self-service solution providers, and end-to-end development providers. The pricing for Chatbot platform providers is based on instance use and resource use basis. Similarly, self-service solution providers have freemium model and their prices start from $10 per month per user. The pricing model for end-to-end or full development providers is not available.
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