Pricing design work when AI made you faster
By Allan Leone on
Nearly a third of agencies are getting pushback on hourly rates, with clients naming AI as the reason. They have a point, and arguing the point is the losing move. The problem is upstream, in the unit you sell.
The conversation now goes the same way most weeks. The client has seen a demo. They have a rough sense of what these tools do. And they are asking, quite reasonably, why the estimate looks the same as it did two years ago.
You can argue. You will lose, because the premise is correct. The work does take less time than it used to.
The structural problem with billing hours
If you sell hours, efficiency is something you have to hide from your own client. Every improvement you find reduces your revenue on the same piece of work, so the incentive is to not mention it.
That was always slightly awkward. It became untenable when clients got their own access to the same tools and could estimate the new floor themselves.
What outcome pricing fixes and what it does not
Pricing the outcome realigns the incentive immediately. Getting faster becomes profitable rather than self-defeating, and the conversation moves from how many hours to what this is worth. That second conversation is better in every way.
What it does not fix, and what nobody warns you about, is that all of the estimation risk moves onto you. On hourly, a vague scope is the client's problem and they pay for the discovery as it happens. On a fixed outcome, a vague scope comes out of your margin, and you find out in week five.
The mechanism that makes it survivable
The fix is not better estimating. We tried that and were wrong at roughly the same rate, just with more confidence.
What worked was splitting discovery into its own paid engagement with its own price, ending in a written scope both sides sign. It is small, it is bounded, and its only deliverable is the definition of the real project.
That moves the guessing to the one place where guessing wrong is cheap. It also gives the client an exit that does not feel like failure, which makes them more willing to start.
Where to start
- Take one service line, the one you have delivered most often, and price it as an outcome. You already know its true cost from history.
- Write a discovery offer: fixed fee, fixed duration, and a signed scope as the deliverable. Two weeks is usually enough.
- Put a change mechanism in the contract before you need it. Out-of-scope work gets quoted, not absorbed.
- Keep tracking hours internally even after you stop billing them. It is the only way to know whether your outcome prices are right.
Tags: agency, business, ai