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    Token

    AI fundamentals & modelsNo additional designation is used.
    Reading time: 2 min.Editorially reviewed on:

    Definition

    Tokens are text modules into which a model breaks down inputs and outputs.

    A token is a processing unit of the model. How text is divided into tokens and billed depends on the respective service and model.

    Simply explained

    Like small pieces of a set that the system processes individually.

    Why it matters in practice

    Helps to realistically classify the possibilities, quality and limitations of AI systems.

    Example from business

    Possible example: Before a long document workflow, a team estimates input and output length.

    Limits and pitfalls

    • Equate characters, words and tokens or estimate costs based on input length only.

    Origin & history

    Tokenization is part of modern language model processing. The OpenAI documentation explains token types and counting; there is no fixed general conversion of words into tokens.

    Use in mid-sized companies

    • Possible application in SMEs: Before a long document workflow, a team estimates input and output length.

    Frequently asked questions

    What does token mean?

    Tokens are text modules into which a model breaks down inputs and outputs.

    What errors should be avoided?

    Equate characters, words and tokens or estimate costs based on input length only.

    Sources

    Sources checked on 09.10.2026. Editorial use cases are hypothetical; no evidence of real customer results.

    Editorially reviewed on:

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