I spoke recently to a man who runs an advertising agency. He had found himself on a plane with the CEO of one of his biggest clients. The CEO had asked, “We know you’re ramping up your use of AI in what you do for us. When are we going to see the fee reduction?”
How would you answer the question if it were put to you? Would you say:
- “Yes, we will be proposing reduced fees the next time we talk about them”;
- “No, we won’t be reducing our fees. The value of what we do remains the same whether we use AI or people to do it, so the fee remains the same”;
- “We’re putting the finishing touches to some really exciting new propositions using AI, things that we have never been able to offer you before. When you see them, we’re confident that you will love them and pay a higher fee for them”.
Agreeing to an “AI Discount” creates a horrible paradox: the smarter you are, the less time you take and the less you get paid. Imagine it; you invest time and ingenuity into finding applications for AI, only to have them result in a demand for a fee reduction.
You need to get on the front foot; additional value to clients means a higher fee. You get to keep the cost savings. You need to do this soon; you need to move as fast as the technology is evolving.
How effectively you handle the “AI Pricing Conundrum” will determine whether AI is the beginning of the end for you, or the start of a golden age.
There is only one pricing model which solves the AI Conundrum and lets you benefit from using AI to do better work in less time. That’s Value Based Pricing, and it’s the only way to be AI-proof in the future.
You may have looked at Value Based Pricing in the past, even tried it, and quite possibly it didn’t work as described. That’s not your fault.
I discovered over several years of working with consulting firms and creative agencies that the Value Based Pricing method you read about is woefully incomplete. It only goes as far as convincing yourself that your work was highly valuable. This is obviously an essential first step, but it’s only Step 1, of 3.
To make Value Based Pricing work and command the fees you deserve, you need to convince not just yourself, but your client, of the value of your work (Step 2). And then you need to exclude competitors who claim that they can do the same work for less (Step 3). Without these two steps, all you’re going to hear when you present your value-based fee is “Let us think about it…” Then it will be like they’ve gone into witness protection. But you’ll still have unlimited access to their voicemail.
Working with numerous consulting firms and creative agencies I first improvised and then codified techniques for Steps 2 and 3. I called the final result the Pricing Genius system, and wrote the book about it.
Applying all 3 steps with clients has resulted in one of them taking the fee for one service line from a few thousand pounds to £46,000, and in another case obtaining a £20,000 retainer for work they were previously doing for free.
I’m offering a 50-minute “AI-Proof Your Pricing” session. We’ll run through what you’re currently doing or planning to do with AI, identifying the pitfalls and developing strategies to avoid them. Then we’ll move from defensive to offensive, identifying the new value you will be creating and developing strategies to be paid properly for it. You’ll end with a playbook for making the advent of AI into the best thing that’s happened for your firm in years.
The fee is £250 and I have sessions available over the next five days. Use the calendar below to book one.
