diff --git a/graphrag/cli/index.py b/graphrag/cli/index.py
index 29991e06ec..e5a5e4de14 100644
--- a/graphrag/cli/index.py
+++ b/graphrag/cli/index.py
@@ -14,6 +14,7 @@
 from graphrag.config.load_config import load_config
 from graphrag.config.logging import enable_logging_with_config
 from graphrag.index.validate_config import validate_config_names
+from graphrag.index.utils.estimate_cost import ask_continue_indexing, estimate_cost_flow
 from graphrag.logger.base import ProgressLogger
 from graphrag.logger.factory import LoggerFactory, LoggerType
 from graphrag.utils.cli import redact
@@ -72,6 +73,8 @@ def index_cli(
     dry_run: bool,
     skip_validation: bool,
     output_dir: Path | None,
+    estimate_cost: bool,
+    average_output_tokens_per_chunk: int
 ):
     """Run the pipeline with the given config."""
     cli_overrides = {}
@@ -80,6 +83,11 @@ def index_cli(
         cli_overrides["reporting.base_dir"] = str(output_dir)
         cli_overrides["update_index_output.base_dir"] = str(output_dir)
     config = load_config(root_dir, config_filepath, cli_overrides)
+    
+    """Run LLM cost estimator."""
+    if estimate_cost:
+        estimate_cost_flow(config, logger, average_output_tokens_per_chunk)
+    
     _run_index(
         config=config,
         method=method,
@@ -112,7 +120,7 @@ def update_cli(
         cli_overrides["update_index_output.base_dir"] = str(output_dir)
 
     config = load_config(root_dir, config_filepath, cli_overrides)
-
+    
     _run_index(
         config=config,
         method=method,
diff --git a/graphrag/cli/main.py b/graphrag/cli/main.py
index 7f0660d556..5bfb9b5569 100644
--- a/graphrag/cli/main.py
+++ b/graphrag/cli/main.py
@@ -192,6 +192,25 @@ def _index_cli(
         writable=True,
         resolve_path=True,
     ),
+    estimate_cost: bool = typer.Option(
+        False,
+        "--estimate-cost",
+        "-est",
+        help=(
+            "Estimate the LLM cost of the indexing pipeline before execution."
+        ),
+    ),
+    average_output_tokens_per_chunk: int = typer.Option(
+        500,
+        "--average-output-tokens-per-chunk",
+        "-avg",
+        help=(
+            "Assumed number of output tokens per chunk for cost estimation. "
+            "Short summarization/classification: 100-300 "
+            "Detailed summarization/QA: 400-600 "
+            "Long-form generation (e.g., full response per doc): 800-1200"
+        ),
+    ),
 ) -> None:
     """Build a knowledge graph index."""
     from graphrag.cli.index import index_cli
@@ -207,6 +226,8 @@ def _index_cli(
         skip_validation=skip_validation,
         output_dir=output,
         method=method,
+        estimate_cost=estimate_cost,
+        average_output_tokens_per_chunk=average_output_tokens_per_chunk
     )
 
 
diff --git a/graphrag/index/utils/estimate_cost.py b/graphrag/index/utils/estimate_cost.py
new file mode 100644
index 0000000000..07ac76671e
--- /dev/null
+++ b/graphrag/index/utils/estimate_cost.py
@@ -0,0 +1,243 @@
+# Copyright (c) 2024 Microsoft Corporation.
+# Licensed under the MIT License.
+# Author Khaled Alam <khaledalam.net@gmail.com>
+
+"""Module for estimating costs of processing and indexing data using language models."""
+
+import sys
+from graphrag.config.models.graph_rag_config import GraphRagConfig
+from graphrag.config.models.language_model_config import LanguageModelConfig
+from graphrag.index.input.factory import create_input
+from graphrag.index.text_splitting.text_splitting import TokenTextSplitter
+from graphrag.index.utils.is_null import is_null
+from graphrag.logger.base import ProgressLogger
+from graphrag.logger.factory import LoggerFactory
+from graphrag.logger.types import LoggerType
+
+
+PRICING_URL = "https://raw.githubusercontent.com/khaledalam/openapi-pricing/refs/heads/master/pricing.json"
+_cached_pricing = None
+CENTS_TO_DOLLARS = 0.01
+
+
+class InvalidInputTypeError(TypeError):
+    """Raised when input_docs is not a DataFrame."""
+
+
+def load_pricing(
+    progress_logger: ProgressLogger,
+) -> tuple[any, any] | tuple[dict, dict]:
+    """Load and cache pricing data for models and embeddings from the pricing URL."""
+    global _cached_pricing
+
+    if _cached_pricing is not None:
+        return _cached_pricing
+
+    try:
+        import requests
+
+        response = requests.get(PRICING_URL, timeout=30)
+        response.raise_for_status()
+        data = response.json()
+        _cached_pricing = (data.get("models", {}), data.get("embedding", {}))
+    except Exception as _:
+        progress_logger.exception("Failed to fetch pricing")
+        return {}, {}
+
+    return _cached_pricing
+
+
+def count_tokens(
+    texts: list,
+    model_config: LanguageModelConfig,
+    chunk_size: int = 1200,
+    chunk_overlap: int = 100,
+) -> int:
+    """Count the total number of tokens in the given texts using the specified model configuration."""
+    splitter = TokenTextSplitter(
+        encoding_name=model_config.encoding_model,
+        chunk_size=chunk_size,
+        chunk_overlap=chunk_overlap,
+    )
+    return sum(splitter.num_tokens(t) for t in texts if t.strip())
+
+
+def estimate_cost(
+    config: GraphRagConfig,
+    input_chunks: list,
+    progress_logger: ProgressLogger,
+    average_output_tokens_per_chunk: int = 500,
+) -> dict | None:
+    """Calculate the estimated cost of processing input chunks using configured models."""
+    if is_null(input_chunks):
+        progress_logger.info("No input provided.")
+        return None
+
+    model_pricing, embedding_pricing = load_pricing(progress_logger)
+
+    embed_config = config.models["default_embedding_model"]
+    chat_config = config.models["default_chat_model"]
+    embed_model_name = embed_config.model
+    chat_model_name = chat_config.model
+
+    texts = [
+        chunk.get("text", "") if isinstance(chunk, dict) else chunk
+        for chunk in input_chunks
+    ]
+
+    chunk_config = getattr(config, "chunking", None)
+    chunk_size = chunk_config.chunk_size if chunk_config else 1200
+    chunk_overlap = chunk_config.chunk_overlap if chunk_config else 100
+
+    total_embedding_tokens = count_tokens(
+        texts, embed_config, chunk_size, chunk_overlap
+    )
+    prompt_wrapped_texts = [f"<prompt>\n{t}" for t in texts]
+    total_chat_input_tokens = count_tokens(
+        prompt_wrapped_texts, chat_config, chunk_size, chunk_overlap
+    )
+
+    total_chat_output_tokens = len(texts) * average_output_tokens_per_chunk
+
+    embed_price_per_1k = embedding_pricing.get(
+        embed_model_name, model_pricing.get(embed_model_name, {}).get("input", 0)
+    )
+    embed_cost = (total_embedding_tokens / 1000) * (embed_price_per_1k / 100)
+
+    if chat_model_name not in model_pricing:
+        fallback = "gpt-4-turbo"
+        progress_logger.info(
+            f"'{chat_model_name}' not found in pricing. Falling back to '{fallback}'."
+        )
+        chat_model_name = fallback
+
+    chat_price = model_pricing.get(chat_model_name, {})
+    chat_input_price = chat_price.get("input", 0) * CENTS_TO_DOLLARS
+    chat_output_price = chat_price.get("output", 0) * CENTS_TO_DOLLARS
+
+    chat_cost = (total_chat_input_tokens / 1000) * chat_input_price + (
+        total_chat_output_tokens / 1000
+    ) * chat_output_price
+
+    total_tokens = (
+        total_embedding_tokens + total_chat_input_tokens + total_chat_output_tokens
+    )
+    total_requests = len(texts)
+    total_cost = embed_cost + chat_cost
+
+    return {
+        "embedding_model": embed_model_name,
+        "embedding_tokens": total_embedding_tokens,
+        "embedding_cost": embed_cost,
+        "chat_model": chat_model_name,
+        "chat_input_tokens": total_chat_input_tokens,
+        "chat_output_tokens": total_chat_output_tokens,
+        "chat_cost": chat_cost,
+        "total_tokens": total_tokens,
+        "total_cost": total_cost,
+        "total_requests": total_requests,
+        "average_output_tokens_per_chunk": average_output_tokens_per_chunk,
+        "chunks_count": len(input_chunks),
+    }
+
+
+def estimate_cost_flow(
+    config: GraphRagConfig,
+    logger_type: LoggerType,
+    average_output_tokens_per_chunk: int = 500,
+) -> None:
+    """Process input data and estimate costs for the entire indexing flow."""
+    progress_logger = LoggerFactory().create_logger(logger_type)
+
+    import nest_asyncio
+
+    nest_asyncio.apply()
+
+    async def load_input(config):
+        """Load input data asynchronously based on the provided configuration."""
+        return await create_input(config.input, None, config.root_dir)
+
+    try:
+        import asyncio
+
+        input_docs = asyncio.get_event_loop().run_until_complete(load_input(config))
+    except RuntimeError as e:
+        progress_logger.info("estimate_cost_flow: Async error: ", e)
+
+    chunk_config = getattr(config, "chunking", None)
+    chunk_size = chunk_config.chunk_size if chunk_config else 1200
+    chunk_overlap = chunk_config.chunk_overlap if chunk_config else 100
+
+    splitter = TokenTextSplitter(
+        encoding_name=config.models["default_embedding_model"].encoding_model,
+        chunk_size=chunk_size,
+        chunk_overlap=chunk_overlap,
+    )
+
+    chunks = []
+    total_token_count = 0
+
+    import pandas as pd
+
+    if isinstance(input_docs, pd.DataFrame):
+        for i, row in input_docs.iterrows():
+            try:
+                content = row.get("text")
+                if content and isinstance(content, str):
+                    content_chunks = splitter.split_text(content)
+                    for _, chunk in enumerate(content_chunks):
+                        tokens = splitter.num_tokens(chunk)
+                        total_token_count += tokens
+                        chunks.append(chunk)
+            except Exception as e:
+                progress_logger.exception(
+                    f"estimate_cost_flow: Error processing row {i + 1}: {e}"
+                )
+    else:
+        msg = f"Expected DataFrame from input_docs, got {type(input_docs)}"
+        raise InvalidInputTypeError(msg)
+
+    result = estimate_cost(
+        config, chunks, progress_logger, average_output_tokens_per_chunk
+    )
+    print_cost_report(result, progress_logger)
+    ask_continue_indexing(progress_logger)
+
+
+def ask_continue_indexing(progress_logger: ProgressLogger) -> None:
+    """Prompt user to confirm whether to proceed with full indexing after cost estimation."""
+    progress_logger.info(f"\n{'=' * 55}")
+    progress_logger.info("Estimated cost completed.")
+    progress_logger.info("Do you want to continue and run the actual indexing?")
+    progress_logger.info("  - [y] Yes")
+    progress_logger.info("  - [n] No (default)")
+    progress_logger.info(f"\n{'=' * 55}")
+
+    confirm = input("Your choice [y/N]: ").strip().lower()
+    if confirm != "y":
+        progress_logger.error("Indexing cancelled by user.")
+        sys.exit(0)
+    progress_logger.success("Proceeding with full indexing...\n")
+
+
+def print_cost_report(result: dict, progress_logger: ProgressLogger) -> None:
+    """Print a formatted report of the cost estimation results."""
+    progress_logger.success("Approximate LLM Token and Cost Estimation Summary:\n")
+    progress_logger.info(
+        f"- Average output tokens per chunk: {result['average_output_tokens_per_chunk']} - Chunks count: {result['chunks_count']}\n"
+    )
+    progress_logger.info(f"- Embedding Model: {result['embedding_model']}")
+    progress_logger.info(
+        f"  Tokens: {result['embedding_tokens']} → ${result['embedding_cost']:.4f}\n"
+    )
+    progress_logger.info(f"- Chat Model: {result['chat_model']}")
+    progress_logger.info(f"  Input Tokens: {result['chat_input_tokens']}")
+    progress_logger.info(
+        f"  Output Tokens (estimated): {result['chat_output_tokens']} → ${result['chat_cost']:.4f}\n"
+    )
+    progress_logger.info(f"TOTAL ESTIMATED: ${result['total_cost']:.4f}")
+    progress_logger.info(f"Total Tokens: {result['total_tokens']}")
+    progress_logger.info(f"Total Requests: {result['total_requests']}")
+    progress_logger.warning(
+        " Note: This estimate is based on the --average-output-tokens-per-chunk value and may not reflect the exact final cost. Actual usage may vary depending on model behavior and content structure. This provides a conservative upper-bound estimate."
+    )