AI Glossary
Token
What is Token?
The basic unit of text that LLMs process. Roughly 1 token ≈ 0.75 words in English. Models have token limits per request (context window) and are often priced per token.
Example in practice
A business analyst managing AI API costs would calculate that a 10,000-word report is approximately 13,000 tokens — helping them estimate monthly spend and decide whether to summarise inputs before sending.
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