AI is proving incredibly useful in most industries. It’s no longer just a novelty, it delivers real efficiencies and cost savings, enabling faster service, more accurate research and analysis, and even supporting more creative processes, says Tracey Shirtcliff, founder and CEO from SCOPE Better.
In South Africa, the influence of AI continues to grow, with the government planning to invest R70 billion in the technology by 2030. Its potential for businesses is enormous. Yet for marketing agencies and other professional service providers, this raises a crucial challenge: pricing.
What pricing model does your agency use?
For the vast majority of marketing agencies, the answer is time and effort-based pricing – or some variation thereof. It has been an industry standard model for decades, largely because it is simple and expected by customers. However, it is becoming increasingly clear that this approach is fundamentally incompatible with the efficiency gains brought by AI.
If AI reduces the time and effort required to complete your projects, the logical consequence is that your billable hours also decrease. For agencies, this means a drop in revenue and a potential devaluation of services in the eyes of clients.
So what do you do? Avoid using AI altogether? Discreetly integrate AI and hope customers won’t notice? Accept reduced bills, even if your results improve? Or explore a new way to price your work?
Moving to a new era of pricing
Pricing based on time and effort has endured because it is familiar. Customers understand this and it’s easy to implement. However, this has never been the best way to communicate the true value of your work. After all, what does your time really mean to your customers?
Deliverables-based pricing, also known as asset-based, solution-based, or outcome-based pricing, shifts the conversation from time and effort to value. By assigning a clear value to each of the services you provide, you are no longer tied to hours worked, allowing you to use AI and other technologies without devaluing your work. It also gives clients greater clarity on what they are paying for, improving their perception of your agency and its offerings.
This approach not only future-proofs your pricing model, but positions your agency as an innovative, results-driven agency. When you remove the emphasis on time and instead focus on what your clients get from your expertise, you create a pricing strategy that is both practical and compelling.
How to adopt deliverable-based pricing
Moving to a new pricing model can seem daunting, but it’s a process that brings significant benefits. Agencies usually start by creating a framework that describes their services in detail. This collaborative effort allows you to break down what your business does at a granular level and ensures your pricing reflects the value of your results.
You may also choose to consult external pricing experts to refine this framework and ensure it meets market expectations. Once established, various tools, such as configuration, pricing and quoting (CPQ) software, can help you streamline the adoption and implementation of your new model.
According to the Simon Kucher Institute, the rapid rise of AI has left most professional services firms ill-prepared for the changes it demands. While this adjustment may seem like a game-changer, it’s also an opportunity to rethink how your agency operates. By adopting deliverable-based pricing, you’re not just addressing the challenges posed by AI: you’re seizing an opportunity to redefine your value and differentiate your agency.
AI is forcing change, but it’s also giving agencies a way to stand out. Those who adapt early will be best positioned to thrive in a world where results matter more than hours worked.
For more information, visit www.scopebetter.com. You can also follow SCOPE Better on LinkedIn.
*Image courtesy of LinkedIn
Better reach AI Marketing Use of AI by Marketing Agencies Marketing rates AI Pricing Problem Tracey Shirtcliff
