Token (LLM)
Token definition for SaaS and AI founders: what it means, how to calculate it, and common pitfalls when reading it in dashboards.
A token is a chunk of text — often part of a word — that language models read and generate. Providers price input and output tokens separately, usually per million tokens.
Formula
Cost = Input tokens × Input price + Output tokens × Output price
In practice
Output tokens usually cost several times more than input tokens. See LLM cost per user.
Related terms
Related
- ARPAAverage MRR per paying customer.
- ARRAnnualized recurring revenue: MRR multiplied by twelve.
- CACSales and marketing spend per new customer.
- ChurnCustomers or recurring revenue lost in a period.
- COGSThe direct cost of delivering your product to existing customers.
- Contribution marginRevenue minus all variable costs, including variable sales costs.
See your real margin in five minutes.
Connect Stripe and your cost providers with read-only access. Free for two connections — no card required.