How to Build an AI Software: A Step-by-step Guide to Transforming Your Business With Custom AI Software

Sudeep Srivastava April 12, 2024
build ai software

Over the past decade, artificial intelligence and machine learning have gained immense popularity. This surge can be attributed to the remarkable increase in the widespread adoption of cloud computing. These technological advancements have paved the way for the development of impressive AI systems capable of accomplishing extraordinary tasks. From AI-generated content produced with Conversation AI systems to AI-powered art and designs, each day presents new challenges that push the boundaries of these autonomous systems.

Let’s talk about transformative historical innovations like the printing press and the personal computer. Just like these inventions changed the norms of history, AI is reshaping society and has become one of the most vital domains in software development, capable of offering great potential for growth and progress to businesses across multiple niches.

According to a Stanford report, AI has captured the interest of more than 50% of businesses that have seamlessly integrated its capabilities into their operational frameworks. Furthermore, more than 76% of them are looking to amplify their investments in technology throughout the year 2023. These facts prove that AI isn’t just some fancy tech but a powerhouse that could reshape entire industries, enhance efficiencies, and propel businesses towards unprecedented heights.

Now, if you are a business looking to build AI software, this blog will help you understand the nitty gritty that revolves around it. In addition to looking at the advantages of building AI software for your business, we will also help you get a good idea of the cost of building AI software.

Build AI software that can help you leverage the $2 trillion market size

But before diving into the details, let’s find out why AI software is worth investing in.

How AI Software Can Help Businesses in Streamlining Their Operations: Understanding the Worth

AI software can streamline your business operations, enhance decision-making processes, and expedite the achievement of your business objectives. According to Statista, the AI software market is expected to reach a whopping $2 trillion by 2030. The software, including the likes of chatbots, image-generating AI, and mobile applications, are the key applications of AI  in the industry that will be improving the overall financial status of the sector in the coming years.

AI market size

AI algorithms can easily and rapidly process large volumes of data, surpassing human speed and accuracy. The scope of AI software also extends toward predicting customer behavior, understanding sales patterns, and even automating marketing campaigns.

Considering the array of potential advantages, investing in AI software emerges as a strategic choice for startups as well as enterprises looking to secure a competitive edge in the digital landscape.

Let us now look at the advantages of building AI software for businesses in detail below.

Benefits of AI Software Development for Businesses

Adopting Artificial Intelligence software has brought about transformative benefits across various industries, offering innovative solutions to address multiple challenges. Let us look in detail at why businesses need to create AI software.

Benefits of AI Software Development for Businesses

Elevated Customer Service

AI-powered chatbots have revolutionized customer service. These intelligent systems handle routine inquiries, offer product recommendations, and help in issue resolution, significantly improving customer satisfaction and reducing overall costs.

Informed Decision-Making

AI platforms offer unprecedented data analysis capabilities, giving organizations essential insights to make informed decisions. Using advanced analytics and machine learning, businesses extract valuable information from extensive datasets, optimizing operations and making accurate predictions.

Efficient Process Automation

AI-based business solutions help organizations automate repetitive tasks, allowing the stakeholders to focus on strategic initiatives. Whether it’s about processing data, handling inventory, or maintaining quality, AI-driven automation enhances efficiency, decreases errors, and speeds up processes.

Precise Demand Forecasting

AI algorithms analyze historical data, market fluctuations, and external factors to provide accurate demand forecasts and efficient inventory management. This AI-powered demand prediction and inventory optimization create a streamlined supply chain, reducing costs and enhancing customer satisfaction.

[Also Read: How Predictive Analytics Can Streamline Operations and Close Business Gaps]

Enhanced Fraud Detection

AI identifies fraudulent activities by analyzing real-time patterns and multiple data sources. AI-driven fraud detection systems assist organizations in preventing various fraudulent behaviors safeguarding financial transactions and sensitive information.

Tailored Marketing Experiences

AI-driven personalization empowers businesses to deliver tailored marketing campaigns and customer experiences, making it one of the sought-after advantages to create AI software.

Optimal Resource Allocation

AI algorithms help optimize resource allocation for industries like transportation, logistics, etc. They allow businesses to make informed decisions, cut costs, and minimize waste by analyzing data and considering factors like traffic patterns, weather conditions, and energy consumption.

How Every Industry is Utilizing AI in Their Business – A Glimpse

By harnessing the power of AI technology, businesses across multiple industries can gain a distinct advantage, optimize their daily operations, enhance customer satisfaction, and explore new horizons. Here are the multiple use cases of AI software development.

Businesses That Can Benefit From AI-Powered Software Development


AI analyzes complex medical data, making way for personalized treatments, and offers real-time patient advice with the help of apps. Organizations can enhance patient care by integrating AI-based virtual nurses or chatbots, paving the way for a streamlined medical consult.


AI optimizes operations, improves product quality, and detects issues in manufacturing software. Predictive maintenance further helps reduce downtime costs, and computer vision enhances the overall real-time quality control.


AI detects network anomalies, enhances multi-layered security, and helps identify threats. Biometric logins and AI-assisted tools are capable of protecting crucial data against cyberattacks.

AI phone face recognition


AI enhances logistics with autonomous equipment, predictive analytics, and automation. AI software development solutions in the logistics field are expected to generate an economic value of $1.3-$2 trillion by optimizing supply chains.


AI is capable of strengthening financial security by recognizing suspicious patterns. For example, using AI-based software was a boon for PayPal, reducing its overall fraud rate to 0.32%. Simply put, the technology can also help in trading and investment management and automates tasks like credit assessment.

AI-based budget management software like Mudra


AI transforms learning by automating tasks, enabling virtual teachers, and addressing academic challenges. The technology can redefine the learning experience for diverse groups of students across multiple areas of the globe.


AI can personalize travel planning, improve customer service, and offer data-driven insights. It enriches the travel experience through booking assistants and service chatbots.

Sports & Entertainment

AI enhances content creation and delivery in media and entertainment. It enables personalized recommendations, content classification, and targeted advertising.

A Step-by-Step Guide to Build AI Software

AI-based software development is a complex process that requires expert guidance. Therefore, it is advisable to partner with a dedicated software development firm like Appinventiv that can help put things into perspective while optimizing the AI software development life cycle for you. Here are the step-by-step guidelines to build AI software for your business:

AI Software Development Process

Gathering Dataset

The first stage to develop AI software involves gathering an all-inclusive dataset corresponding to the problem. This dataset should encompass a wide range of examples that the AI will encounter in the real world. This data serves as the foundation for training and assessing the AI model.

Cleansing and Labeling

The dataset is cleansed in this phase to address missing values and inconsistencies. Once cleaned, the data is labeled or annotated, ensuring that each entity is marked with the correct output or category. Annotation plays a crucial role in supervised learning and offers AI-labeled training data.

Model Selection

Once the data is cleansed, it is time to choose an appropriate AI model architecture based on the nature of your business problem. For instance, a machine learning algorithm might be the right choice if you’re dealing with structured data. On the other hand, AI software for image recognition might need a convolutional neural network (CNN).

Ingesting and Training the Model

In this phase to develop the AI software, the cleaned and annotated dataset needs to be prepared for training. It should be split into training, validation, and testing sets. The chosen AI model should be trained using the training data while its performance is validated on the validation set. It is necessary to make adjustments to the model parameters and algorithms in order to achieve satisfactory performance.

Fine Tuning of the Dataset

If the model’s performance is not up to the mark, it is time to refine the dataset by adding more examples or fixing any problems that arrive during the training process. This iterative process is capable of making the model better at understanding new and unseen data.

Front End Application Development

Once the data is fine-tuned, the development process to create AI software begins. It involves developing a user-friendly mobile or web app that will interact with your trained AI model. This interface lets users enter information and get predictions from the AI based on the specific app functionalities.

Deployment and Further Refinement

After completing the necessary steps, the AI model and front-end application should be deployed to a production environment. This will allow users to access and utilize the solution. It is important to continuously monitor the model’s performance and gather user feedback. Observing real-world usage patterns can help refine the AI model and the software further.

After looking at the various AI software development steps, let us move ahead and take a good look into the details of the development costs associated with creating a similar software.

Understanding the AI Software Development Costs

To give you a rough idea, the overall AI software development costs can vary from $50,000 to $300,000. Several factors impact the cost to develop AI software, such as the complexity of the software, features to be integrated, the location of the hired IT consulting firm, the technology stack used, the project delivery timeline, etc.

In simple terms, one can say that the overall software complexity is the most vital factor that impacts the development budget. For instance, if you wish to develop AI software that is highly complex AI software and has an intricate feature list, it will ultimately cost you more as compared to simple software with minimum functionalities and features.

Software TypeDevelopment Cost EstimationTime Frame
Simple$50,000 to $90,0003 to 6 Months
Medium Complex$100,000 to $200,0007 to 9 Months
Most Complex$220,000 to $300,0009+ Months

Let us look at the multiple factors that affect AI software development costs in detail below.

Factors Affecting the Cost to Create AI Software

The cost to build AI software is influenced by multiple factors ranging from technical to regulatory compliance, user experience, maintenance, etc. Let us understand how they affect the AI-driven software development budget in detail below:

Factors Affecting the Cost of AI Software Development

UI/UX Design

The complexity and quality of the UI/UX design significantly influence the cost of developing an AI-based software solution. Creating an intuitive and visually appealing user experience demands additional design efforts and, therefore, directly adds to the overall expenses of AI-driven software development

Platform Selection

The choice of platform for software development, whether it’s iOS, Android, or cross-platform, affects the overall development cost. It is advisable to create AI software with a single platform and then expand to cross-platform software based on market response in order to optimize the initial costs.

Development Team Size

The size and composition of the development team, whether in-house, outsourced, or freelancers, play a pivotal role in determining the AI-assisted software development costs. Different options have varying financial implications. If you wish to streamline your development process and leverage state-of-the-art technology while optimizing the budget, it is advisable to partner with a dedicated outsourcing team like Appinventiv.

Geographical Location

The location of the development agency that offers AI software development services directly impacts the cost to build AI software. The hourly rate of development varies as per multiple geographical regions across the globe.

App Development Rates as per Regions:

  • Eastern Europe: $60 – $70
  • Asia: $40 – $50
  • America: $100 – $120
  • Africa: $20 – $40

Data Sets Costs

Choosing between proprietary and open-source data sets often leads to an increase in the final costs of software development using AI. Open-source datasets are usually free while their processing costs may add up to the budget eventually. On the other hand, procuring proprietary datasets licensing comes at an additional cost and can vary as per the size and quality.

Annotation Costs

The overall annotation costs can also add up the cost of developing an AI software. Several factors determine the cost of annotation  such as the complexity of the data and the method used. When it comes to complex data like images, it is necessary to use a careful annotation technique which can result in higher costs. Manual human annotation and automated approaches vary when it comes to the cost and accuracy.

Algorithm Complexity and Training

The complexity of AI algorithms, such as deep learning neural networks, affects the development costs to create AI software. Complex algorithms may require more time and computational resources for training, leading to higher costs.

Regulatory and Compliance Requirements

Healthcare, finance, and legal industries have stringent regulatory requirements (HIPAA, GLBA, GDPR, etc.) Developing AI software that adheres to these regulations may require specialized expertise, thorough testing, and documentation, contributing to higher costs.

Also Read- How Much Does it Cost to Develop an AI Testing Tool like Katalon 

Cloud Storage

Cloud storage also adds to the overall development costs to create AI software. These costs are influenced by three main factors: data volume, access frequency, and the cloud service provider businesses wish to hire. When it comes to data volume, larger amounts of data will result in higher costs, while frequent access to the stored data will also contribute towards it. The Cloud storage costs vary per different cloud providers; thus, it is crucial to carefully consider and compare the options available.

[Also Read: How Much Does It Cost to Develop a Tool Like Jasper AI?]

How Can Appinventiv Help You Build AI Software That Guarantees Maximum ROI?

AI technology is crucial for developing software replicating human intelligence, making smart decisions, and enhancing daily tasks. It is rapidly gaining momentum across industries, leading to improved customer satisfaction and a competitive edge for businesses. AI’s versatility and potential are evident in various sectors, including fintech, social media, telemedicine, etc. It paves the way for new opportunities, fosters growth, and drives innovation. When it comes to robust AI-based software development, professional intervention from experts in the field is rather necessary.

Appinventiv is a dedicated AI software development company with a proven track record of delivering cutting-edge AI solutions to turn your AI vision into reality. Our skilled professionals specialize in leveraging AI’s potential across diverse industrial domains, guaranteeing maximum returns on your investment.

With a deep understanding of AI development and the specific needs of various business verticals, our customized AI solutions are designed to tackle your unique business challenges and opportunities. By partnering with us, you can harness the power of our Generative AI development services to fuel innovation, enhance customer experiences and maintain a competitive edge in today’s landscape.

We recently launched an AI-based healthcare app, YouComm, that allows patients to connect with healthcare nurses with just hand gestures and voice commands! The solution has been adopted by 5+ hospital chains across the US.


Get in touch with us to embark on your AI journey and experience the transformative impact of robust AI solutions that can bring your business visions to life.


Q. What will be the future of AI-based software development for businesses?

A. The future of AI is marked by rapid advancements that will redefine its landscape. One can expect significant progress in various domains. For instance, Explainable AI will take center stage, enabling transparent decision-making in fields like healthcare and finance. AI for Edge Computing will also be on the rise, bringing real-time decision-making closer to data sources and reducing cloud reliance. Ethical AI Governance will gain prominence, ensuring responsible development, deployment, and usage. AI-augmented creativity is expected to reshape artistic domains, pushing creative boundaries. AI as a Service (AIaaS) will be able to simplify access to AI capabilities, offering ready-to-use resources and frameworks.

Q. How much does it cost to build AI software?

A. The cost to create AI software varies from $50,000 to $300,000. Several factors further impact the overall cost of development, such as the complexity of the software, the project delivery timeline, the location of the hired software development firm, the UI/UX design of the software, features to be integrated into the software, etc.

Q. How long does it take to build AI software?

A. The timeframe to build AI software directly depends on the software’s overall complexity. For instance, a highly complex software with an extensive feature set will take around 9 to 12 months for development. On the other hand, simple software with a minimum feature list will take somewhere around 3 to 6 months. Get in touch with our team to get project timeline details custom to your requirements for software development using AI.

Sudeep Srivastava
Co-Founder and Director
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