The Great Agency Reset: Moving Beyond Time-Based Pricing in an AI World

Why AI is Forcing a Change 

AI has made almost every agency's pricing model obsolete in less time than it takes some to respond to an RFP

Now that generative AI can produce creative work in minutes instead of weeks, time-based pricing has become a liability that clients are and will continue to exploit. This has exposed the fundamental misalignment between the value agencies provide and how they've been charging for it.

When you price based on time and effort, faster delivery should mean lower fees. That's the logical outcome of an effort-based pricing model, and clients aren't wrong to push for it. AI is simply making that calculation impossible to tolerate and giving procurement more leverage.

This is especially problematic for agencies still selling their expertise the same way as their competitors: as a menu of capabilities and services with custom scopes for every project. That structure makes it easy for buyers to compare firms and negotiate fees down. The custom scopes drive up overhead, increase rework risk, and prevent scalability. It positions these firms as a vendor, not a strategic partner, and it grossly undervalues the expertise they actually bring.

The result is thin margins that force a vicious cycle—to grow, agencies have had to bill more hours—which means more work, more headcount, more complexity, and ultimately, the talent burnout we’re seeing across the industry. They've been scaling busyness, not value. AI is accelerating this crisis and making the traditional model unsustainable.

What Agencies Are Trying—and Why It's Not Enough

Many agencies are responding the same way: switching to fixed fees for deliverables, but still based on time estimates. It's the same undervaluation with a different label.

This approach creates a triple threat: First, if your agency isn’t differentiated, your deliverables become commoditized offerings that procurement can benchmark against competitors. Second, procurement has access to industry benchmarks for every deliverable—the typical roles, effort, and rates—so they'll tell you exactly what they think you should charge. Third, any pricing still rooted in time estimates won't reflect your true value when AI is shortening delivery timelines.

The real issue is that many agencies moving to deliverable-based pricing are only changing how they capture value, not how they create value. It's a change to contracts and billing methods, but not much else. When client needs, media landscapes, and technology have shifted dramatically, you also need to consider if what you've been selling will still be valuable and  sustainable as a business model.

What's Really Under Pressure

The pricing pressure from AI isn't hitting all agency work equally. It's primarily affecting execution and production work—the deliverables that can be automated, accelerated, or benchmarked. Strategic and advisory work remains valuable, but many agencies have been giving it away in pitches or pricing it the same way as execution, which severely undervalues their strategic expertise.

This creates two clear paths forward: integrate execution services into larger strategic solutions where they're valued as part of the outcome, or invest more heavily in building strategic and advisory capabilities that AI enhances rather than replaces. The best way forward is to do both. What we call a solution-based commercial model—structuring your expertise as solutions to specific client problems rather than selling services or hours—makes both paths possible.

Is pricing the answer?

We can't price using time any longer, so the goal is moving to pricing anchored in business outcomes and value. In doing that, pricing is the last step of a necessary three-part transformation: position, product, then price.

The Agency Value Model™ below shows how this transformation works in practice.

The Transformation Sequence That Works

Pricing is the last step of a necessary three-part transformation: position, product, then price. This sequencing matters because each step builds the foundation for the next. Skip the foundation work, and it's just messaging. But it needs to be model before message.

Agencies need to first define the outcomes their best-fit clients care most about and would pay a premium for. Then identify the specific problems standing in the client’s way that the agency is uniquely qualified to solve. With that clarity, firms can design ideal solutions that go beyond traditional services—integrating proprietary tools, licensable IP, and AI-powered offerings.

When you lead with strategic problems and outcomes, execution becomes a component of the solution rather than a commodity to be benchmarked. A "market entry program" that includes creative execution is much harder to commoditize than "brand strategy + creative services" priced separately.

Pricing follows product. Product follows positioning. You can't design better pricing until you know what problems you're solving, for whom, the way you'll do it, and what solving them is worth.

Positioning defines the problems you solve and why you're uniquely qualified. Productized solutions are how you solve them in a repeatable, scalable way. Together, they create the foundation for value-aligned pricing based on expertise and outcomes, not effort.

We've seen firms making this shift increase prices 66% on core services with no added delivery cost, achieve 39% gross income growth while doubling new client acquisition, and boost retainer deal sizes by 50%. The common factor: they stopped selling services and started solving problems.

The question isn't whether this transformation is necessary—it's whether you'll lead it or be forced into it. Your Monday morning decision: Will you continue competing on deliverables and time, or start competing on outcomes and expertise?