Why this checklist exists
Hiring an AI development partner is a different decision from buying a SaaS subscription. You are funding a custom build — which means quality, timeline, and ownership terms are set entirely by the contract you sign. Many Israeli business owners discover this too late: after paying a deposit on a project that delivers a demo but never a production-ready product.
The seven questions below separate serious AI builders from companies that sell workshops and call it development. Ask them in the first meeting. Vague answers are data.
1. What percentage of your projects finish on time and within budget?
Any reputable AI studio tracks this. Above 80% is realistic for fixed-scope projects. If the answer is "it depends" or "every project is different," they either don't track it or don't want you to know. Ask for two to three references from the past six months, from businesses similar to yours in size and industry — not from their biggest showcase client.
2. What is your pricing model — fixed, hourly, or "flexible"?
For a defined AI product (a WhatsApp chatbot, a document agent, an automated scheduling system), a fixed-price contract should be standard. Hourly billing suits open-ended maintenance or discovery work — not a product with a written spec. "Flexible" pricing almost always means hourly billing under a better name. Insist on a written scope document and a fixed total before signing.
Realistic market range for a working AI agent in Israel: ₪30,000–₪150,000 depending on complexity. Below ₪20,000 for a custom build typically means a template reskin or a scope so narrow the product won't survive real-world use. For a full breakdown by project type, see the AI agent cost guide for Israel.
3. Who actually builds the product — your employees or subcontractors?
Some AI companies sell you a project and quietly outsource the work to offshore contractors you will never speak to. This is not inherently wrong, but you should know. Ask: "Who will be assigned to my project, and can I meet them before we start?" If the vendor dodges the question, your project may be managed by someone who has never deployed a production AI system for an Israeli business.
4. Do I own the code and data at every stage?
Code ownership should transfer to you continuously — not only at final delivery. Ask for shared repository access (GitHub or equivalent) from week one. Ask specifically: "If I stop payments halfway through, what access do I retain?" The answer reveals whether this is a partnership or a hostage arrangement. Your data — documents, customer records, training examples — must also remain yours under GDPR and Israeli privacy law, not stored on the vendor's infrastructure without a signed data processing agreement.
5. What is your experience with Hebrew AI, Priority ERP, and Israeli integrations?
Building an AI product for an Israeli business is not the same as building one for a US company. Hebrew NLP — accurate entity recognition, right-to-left text flow, Israeli address and date handling — requires specific model choices and prompt engineering. Priority ERP integration requires hands-on API familiarity. WhatsApp Business API has Israeli-carrier-specific quirks. Ask for one concrete example where they solved a specifically Israeli technical problem.
If they say "we use GPT-4 and it handles Hebrew fine," probe deeper. Off-the-shelf models hallucinate in Hebrew far more than in English. Production-ready Hebrew AI requires careful prompt design and often fine-tuned components. A vendor that doesn't acknowledge this hasn't shipped a real Hebrew product. For context on the Hebrew AI landscape, the Hebrew AI LLMs guide covers which models work and which don't for Israeli business use.
6. What happens after launch — maintenance, model updates, and support?
AI systems are not like traditional software. Underlying models get deprecated. Business processes change. The WhatsApp Business API updates. A product working in October may break silently in January if no one monitors it. Ask specifically: "What does your post-launch support package include, and what does it cost?" A common market structure is a monthly retainer of ₪3,000–₪8,000 covering monitoring, model updates, and minor adjustments. If the vendor offers nothing for post-launch, you carry that risk yourself from day one of production.
7. Can we start with a small paid pilot before the full project?
The fastest way to evaluate an AI development company is to pay them for a small, well-defined deliverable first. A two-week pilot — a working WhatsApp AI chatbot for one specific use case, or a document-search demo on your own files — tells you more about their quality and communication style than any pitch. Trustworthy companies welcome this. Companies that insist on a full contract before showing you a live prototype are structurally misaligned with your interests.
For a practical framework on when custom development beats buying an off-the-shelf tool, see the guide on builder vs. custom development for Israeli businesses.
What a trustworthy answer looks like
Companies worth hiring answer questions 1–7 clearly, without hesitation, and point you to contracts or references that verify their answers. They do not pressure you to sign before you have spoken to at least one previous client. They show you a live working demo — not a slide deck — of something they built for a similar business.
Palmidos builds working AI products for Israeli businesses in 60 days, at a fixed price, with code ownership from the first commit. If you want to see a specific use case demonstrated on your own data before committing to a full project, the AI Blueprint session is built exactly for that. Or book a 15-minute call to get a specific answer to your situation.
FAQ
How much does an AI development project typically cost in Israel?
Custom AI projects in Israel range from ₪30,000 for a focused single-function agent (WhatsApp chatbot, document Q&A, automated scheduling) to ₪150,000+ for multi-system integrations. Prices below ₪20,000 for a custom build usually indicate a heavily templated product. Monthly maintenance retainers typically add ₪3,000–₪8,000. For a detailed breakdown by product type, see the AI agent cost guide.
How long should a custom AI project take?
A well-defined MVP — a WhatsApp agent, a document-search bot, an automated intake system — should be operational within 60 days. Projects that run longer typically have one of three problems: poorly defined scope, an inexperienced team, or scope creep that was not controlled. A six-month timeline for a single AI feature is not standard practice; it is a planning failure.
What is the difference between an AI software house and a regular software house?
A regular software house builds custom applications (web apps, mobile apps, ERP extensions) using conventional programming. An AI software house specializes in systems where the logic is learned from data — large language models, machine learning, computer vision. In practice, the best AI companies in Israel do both: they build the AI component and wire it into your existing business infrastructure (Priority ERP, WhatsApp, your CRM).
Is a large AI company or a boutique studio better for an Israeli SMB?
For Israeli SMBs, boutique studios (teams of 5–20) typically outperform larger companies on response time, senior-level involvement, and total cost. The risk is capacity: a boutique may have limited availability. The mitigation is the pilot — if they deliver a small pilot well, they can deliver a larger project. Large companies carry overhead that inflates prices without necessarily improving quality.
