What Pricing on Value Actually Tests

Pricing on value reveals a problem most agencies only discover after they try it.

In some firms, the shift works. Pricing conversations move from cost justification to outcomes. Clients engage differently because they're buying something they can evaluate on their own terms and defend internally. Agency leadership gets pulled into fewer deals because everyone can articulate and price the agency's real value. Forecasting stabilizes. Revenue and confidence build together.

In other firms, the shift makes things worse. Proposals swap a calculation of hours for a fixed fee, but the motions behind the change don't change. Clients still negotiate as if they're buying time. Engagements are scoped from scratch on every deal, teams still estimate in hours, and profitability still depends on how efficiently people are deployed against the fee. The pricing label changed. The model generating the price didn't. Revenue stays tethered to the capacity of the people delivering the work.

What separates these outcomes is how well the agency’s value is defined and operational.

When value is sharply defined and embedded in how people think and work, and is visible across all external commercial touchpoints, price conversations with clients and procurement become a discussion about their perception of what a fair balance between value creation and value capture looks like.

When value hasn't been defined, pricing on value becomes a credibility conversation. The agency is asking clients to pay for something it can't consistently name, prove, or measure. Clients and procurement push for cost data to justify the investment compared to similar-looking firms and industry benchmarks for similar work. That's a different problem. It requires different work.

Two Problems That Look Identical Until You Try to Fix Them

A pricing model problem is a failure to capture value the firm already creates. Clients recognize the work and rely on it — but the commercial touchpoints, how price is determined, how revenue is billed, how negotiations are handled, leave money on the table. The fix is better pricing and billing models, stronger commercial governance, smarter negotiating. The organization doesn't need to change what it does or how it works. It needs to change how it charges for its expertise.

A value model problem is a failure to define the value the firm produces from the client's perspective — and to build the agency around that definition. The firm hasn't established what it does differently that clients can't get elsewhere or replicate internally. No fee structure resolves this. The problem isn't how the firm charges. The problem is that it's pricing against a definition of value the market views as commoditized — hours, effort, and deliverables similar to other firms. Price and efficiency become the only levers left, and neither compounds from deal to deal.

Both problems surface in the same place: stalled negotiations, compressed margins, pricing conversations that feel harder than they should. Conflating them is the most expensive misdiagnosis an agency can make, because a pricing intervention applied to a value model problem deepens the constraint while creating the appearance of progress, and reinforces the agency's doubt that clients want anything other than a time-based model.

The Test That Separates Them

The most useful diagnostic question I've found: if pricing were fixed tomorrow — every engagement priced exactly right, every client paying without resistance — what would still limit the firm's ability to scale with confidence?

If the answer includes custom scoping on every engagement, unpredictable delivery, dependence on senior talent to execute work that should be systematized, or difficulty articulating why the firm is distinctly valuable, pricing isn't the constraint. Those are value model problems, and no pricing model resolves them.

A second test: what happens when the agency attempts to price on value or outcomes? In firms with a pricing model problem, leaders hold the line with confidence. The client may negotiate, but they're negotiating the allocation of value they already recognize, not questioning whether it exists. In firms with a value model problem, the attempt increases tension. Procurement dissects cost. Exceptions and discounts multiply. Leadership steps in to make it work. The pushback is about definition — clients can't see why a new pricing approach is better for them because their perception of what they're buying hasn't changed. The agency changed how it prices. It hasn't changed what it sells.

The clearest signal comes from inside the firm before it comes from clients. In firms with a pricing model problem, value is contested externally — clients believe in the value of the work but debate how much of it the agency should capture. In firms with a value model problem, value is contested internally first. Teams disagree — often without realizing it — about what creates value, who owns it, how to articulate it, and how it should be scoped and priced. The account manager quotes one price. The team reevaluates the scope. Leadership steps in to make it work. It feels like a process and pricing problem, but it's an organization that hasn't reached a shared, operational definition of what it's actually selling. In the Agency Value Model, it's always a Proposition problem.

The Pricing Lever Is the Default for a Reason

Think about what happens when a patient presents to a doctor with joint pain. The obvious intervention is to treat the joint. If the underlying cause is systemic — a structural imbalance elsewhere in the body — the joint treatment provides temporary relief while the real problem continues. In the agencies we work with, pricing is that joint. It's where the pain presents. It's rarely where it originates.

Pricing problems are contained. They live in a specific place within the firm — in proposals, contracts, and procurement conversations. A finance leader can address a pricing problem because it’s within their locus of control. Finance owns it. New business and account leaders can support it.

Value model problems live across the firm — how the agency defines its uniqueness, what it sells, how it delivers, and what it measures. They force questions most agencies haven't answered: what makes us distinctly valuable, and what has to be true internally for clients to see and believe it? They require building something, not just describing it. Which is precisely why a rational leader under pressure reaches for the pricing lever first — it's contained, it's controllable, and it doesn't threaten the existing beliefs across the firm. Even when they sense the real problem, it's a harder diagnosis to explain and harder still to get others to act on. They alone can change how the firm prices. They alone can not change the agency’s positioning or value proposition, it’s offerings, or the operating model.

The Sequence That Ends the Pricing Problem

The firms that resolve this don't begin with pricing. They start by getting alignment across strategy, creative, account management, and leadership on a single operational definition of where the firm's value comes from — not a positioning statement, not a tagline, but a working answer reflecting the firm's expertise, the problems it's uniquely qualified to solve, its differentiated offerings, and the measurable impact it creates. That alignment is harder than any pricing conversation. It requires the business to name what it's uniquely capable of producing and build the commercial architecture around that.

Once that definition is in place, clients engage differently — the conversation focuses on problems, solutions, and outcomes because that’s what the firm has built around. It knows what it's selling. The client can see what they're buying. The substance underneath the price finally supports it. The scope of what clients can question narrows on its own.

Not sure which problem you're dealing with? The Value Model Diagnostic tells you where your model is constrained and what to address first.