AI Shifts Marketing Agency Pricing

AI's Impact on Marketing Agency Pricing

Time- and effort-based pricing has been typical for marketing agencies because it is established and simple. However, AI is changing how we work and will disrupt how services are billed, which requires a shift across the sector.

AI's impact is already being felt, with the potential to enhance and expedite processes like research, data analysis, editing, ideation, and copywriting. It saves agencies time and effort, which poses a problem. If you charge for time and effort but AI reduces both, you’ll have to reduce invoice values. This could affect profitability and the perceived value of your work.

Potential Solutions

One option is to ignore AI, but your business could fall behind. Another is to use AI but bill as if you’re not, which introduces dishonesty. You could also accept lower profits or consider layoffs. Or, you could find a smarter pricing model.

Many agencies use time- and effort-based pricing because it was standard. Now, businesses need more from their pricing models such as something that can withstand the impact of AI, but also a selling and differentiation tool. Deliverable-based pricing can provide this.

Deliverable-Based Pricing

Deliverable-based pricing enables agencies to create a priced menu of services by assigning a value to each offering. This shifts away from selling time and focuses on client-focused pricing. Agencies can build quotes and pitches tailored to client needs, ensuring transparency. This also allows teams to use AI without affecting the bottom line.

Implementing Deliverable-Based Pricing

Changing a pricing model can be intimidating. With deliverable-based pricing, you can use the model to your advantage if you know your business well. By collaborating with stakeholders, you can shape a menu of services to meet client needs. The idea is to shift away from focusing on what has gone into each product and instead look at what you can do for the client. External pricing professionals and software can help you move forward and maximize your pricing structure's potential.

While AI is driving change, many changes are overdue, including pricing. By introducing deliverable-based pricing, you can enhance the value of your services, differentiate your agency, and build transparency into your processes. This holds potential, especially for agencies that move first.

Advertising and marketing agencies need to abandon traditional time and effort-based pricing models in favor of deliverable-based pricing as AI increases.