The New Value Quadrant for Consulting Pricing in the AI Era

AI is deflationary.

Prices are compressing, retainers are shrinking, execution layer work is getting cheaper and will continue to get cheaper by the month.

BUT it’s not all bad…

this is going to create more demand than we’ve ever seen.

Before we dive into that, I have to tell you a little bit about a conversation with an agency friend recently that made me want to write this immediately…

He told me an agency he knows recently dropped their fees. Not because the work got worse. Not because the results dipped. They dropped their fees because can do AI most of the work now.

Their logic:

“We’re using AI to do a lot of the heavy lifting, so we can’t justify the same rates.”

So they literally offered an AI discount.

That’s what I call the AI pricing trap.

You get better tools, you produce more output, you deliver faster… and then you charge less because the machine did some of the work (or even all of the execution layer)

If you do that…

You just gave your client a discount for your own innovation.

Think about that for a second.

This is Jevons Paradox playing out in real time.

In 1865, William Stanley Jevons observed that when coal became more efficient to use, people didn’t use less coal. They used more.

The efficiency gains made it cheaper per unit, which increased total consumption.

The same thing is happening with AI tokens. And we can parallel that to happen with consulting and agency services.

As the cost of producing output drops, demand for that output goes up.

But here’s the main reason I’m mentioning this:

The agencies and consultancies who understand this aren’t going to race to the bottom on price.

They’re going to capture the new value that efficiency creates.

The ones who drop their prices?

Well, they’re telling the market that their value was always in the labor. In the hours. In the “hands” on the account.

And if that’s what you were selling, then yes. Your pricing is in trouble.

But if you’re selling outcomes, transformation, and conviction… your pricing has nothing to do with how the work gets done.

I wrote about this in the Service Stack, the macro shift happening across consulting and agency services where AI is compressing execution and the agencies and consultants that thrive in the future will sell on transformation, relationship and belief.

You can read more about the Services Stack & what replaces the traditional consulting and agency model here:

So that’s the macro picture.

The question I’ve been sitting with since writing that piece is:

Because the old models don’t work anymore.

Flat retainers assume a fixed cost of delivery that no longer exists. Hourly billing punishes you for being faster. Project fees don’t account for the 10x to 100x value creation that’s now possible when you deploy your IP through agents.

I’ve been working through this with my own practice and with clients, and what I’ve landed on is a framework I’m calling the New Value Quadrant.

In this piece, I want to walk through each quadrant and how to think about pricing in the new era we are heading in.

The New Value Quadrant

There are 4 ways to price consulting and agency services in the agentic era.

4 distinct quadrants, each with a different relationship between you, your AI agents, and the value you create.

Most service providers are still stuck on the legacy pricing models. Or worse, they haven’t even considered that multiple models are emerging. They’re still thinking in retainers and hourly rates while the entire value landscape shifts underneath them.

The New Value Quadrant gives you a map.

Not every quadrant is right for every client or every stage of your business. Some of you should start with Quadrant 1 and stay there for a while. Others are ready for Quadrant 3 or 4 today.

SUPER IMPORTANT NOTE: you can build a beautiful business by operating only in 1 of these quadrants and the goal IS NOT for you to “ascend” from quadrant 1 to quadrant 4. This is why I’m calling it a quadrant, not “stages” or “steps”.

But you need to know all 4 exist so you can make deliberate choices about how you capture value instead of defaulting to whatever pricing model you inherited 5 years ago.

Here’s the quadrant:

Quadrant 1: The Margin Play

In short: your price stays the same yet your delivery gets dramatically more efficient a la agentic workflow and delivery and you keep better margins.

This is the simplest play. You don’t change what you charge and you don’t change what you deliver. But because AI agents are handling production under your team, your cost of delivery drops significantly.

Your margins expand and profitability improves AND the client gets the same (or better) results they were already paying for.

If you’re a client of mine, I wouldn’t just allow you to do this. I would have you focused specifically on how you can add even more value under this quadrant. Because the margin you’re creating isn’t just profit. It’s runway. It’s breathing room to go deeper with the client in ways you couldn’t before.

What does that look like?

It means taking the time you’re saving on execution and reinvesting it into the relationship and going further up the value chain to get your client closer to “goal accomplished”.

In other words:

• More strategic thinking

• More proactive recommendations

• More “hey, I noticed this and I think we should adjust” or more of what I think we OUGHT to do more of “here’s what we already did for you” (without that “doing” costing you more or losing you margin)

The kind of value that turns a client from a 12 month engagement into a multi year partnership.

And that kind of value will only be achieved if you build on the Services Stack and deploy agents to handle most of your execution work.

If you don’t do that, the trap in this quadrant is guilt. You feel like you should pass the savings on because the work is “easier” now.

Sure. You CAN do that if you want, but remember:

Client didn’t hire you for difficulty. They hired you for results.

And I’ll take it a step further:

If you drop your price because AI made the delivery easier, you’re training the market to devalue your expertise.

You’re telling every future client that your worth is tied to how hard you work, not how much value you create. That’s a positioning problem that compounds over time.

If you’re still getting your bearings in the agentic era, start here and stay here while you build the infrastructure for the other quadrants. Because if you want to move into another quadrant you must, MUST, deliver more value up the value chain in order to price accordingly.

Quadrant 2: The Volume Play

This is where it gets interesting and starts to feel like SaaS, or platform as a service. And I think this quadrant is going to surprise a lot of people in consulting and agency services because it doesn’t look like anything we’ve traditionally done.

Remember Jevons Paradox?

As the cost of delivering a unit of service drops, demand for that service increases. Quadrant 2 is built directly on that insight. In this model, the client pays for what they consume of your service, not for access.

The client doesn’t pay a flat retainer to “have you on deck” or pay for a set hours or a set number of outputs per month in a traditional SOW.

“Consumption” here means actual outcomes.

They pay based on actual usage and outcome of your services.

That can be:

• Qualified sales calls

• Campaigns deployed

• Research decks delivered

• Brand audits sent

• Excel sheets ready for end of month close

You get the picture.

Remember: The goal isn’t just focusing on leading indicators but as far down the value chain as you can.

However, unlike a traditional usage model with software, where you can literally have an infinite bill, you crafted an experience with the client where the more they use they either get a tier discount or they get “free” usage after they surpass an exuberant limit.

Why?

Churn is a real issue for consulting and agency services. I’ve seen client lifetime values of anywhere of 3 months to 3 years. And some rare occasions where clients stick around for 7 years+.

First and foremost, we have to address the elephant in the room:

You actually have to deliver results for clients. Period, full stop.

Now with your ability to deliver results backed now with agents for execution, when you price in this quadrant you want to aim for your consumable services to be used for the entire lifetime that your client is in business.

And if you want that to happen, you need to focus on the relationship layer and create a delightful experience for your clients.

Remember, this isn’t SaaS. You are delivering transformation with the human judgment, relationship and belief layer.

And even though you might be feeling you’re leaving revenue on the table, I want you to think long term:

If a client stays for 8 years instead of 18 months (which is closer to what I’ve seen as typical churn), the lifetime value crushes any short term revenue you “left on the table”.

That’s the volume play. More consumption, better experience, longer relationships, extraordinarily longer lifetime value (this level of value creation is part of the net new that can only be unlocked if you’re deploying agents at your execution layer and you operate at the transformation layer of the Services Stack)

Quadrant 3: The IP Play

This is the one I’m most actively building right now in my own practice. And I think it’s the quadrant most service providers don’t even realize is available to them.

Every agency and consultancy has a way of doing things. You’ve spent years, maybe a decade or more, developing your own methodology. Your own frameworks. Your own playbooks for how you take a client from point A to point B.

That’s your intellectual property.

And in the past, the only way to monetize that IP was to sell your time applying it. One hour in, one hour out. Your capacity was the bottleneck.

You could only serve so many clients, go only so deep, because every engagement required you or someone on your team to personally execute the process. Or you went the info product and coaching route to maximize value at scale.

While all those are still valid, I’d like to introduce a 3rd path as you package your IP into agentic workflows.

Your methodology becomes an operating system.

The agents execute it. And suddenly one hour of strategic input produces what used to take 100 hours of human labor (this is no exaggeration)

I want to be really clear about what this means because I think most people are going to gloss over it.

You’re not giving the client the license to take your IP and run with it. You’re not building a SaaS product and hoping they figure out how to use it. You’re running your own internal agent systems to deliver the service, YOUR service, your methodology, your way of doing things, at a scale that was physically impossible before, enabling the client to get even further to “finished/goal complete” as possible.

The value you can create goes from 10x to 100x… and I don’t think 1000x is out of reach (and I’m not being hyperbolic here, you can only imagine the waste, lag and slow pace of some companies where you can truly be a 1000x force multiplier.).

I’ll give you a real example of what this looks like.

I’m currently in discussions with a potential client who wants to grow a division of their company by a significant amount. They’re not going to build agents and they’re not going to create the workflows…they don’t want to nor know how to (they are in the Partner Trifecta, which I’ll elaborate later).

What they want is the approach, the strategy, and the execution that is enabled for them to reach that growth with my unique methodology.

Because I packaged all of that into several agentic workflows and agents, what used to take months (yes months) can be delivered in weeks.

And here’s the pricing shift:

You’re not pricing hours or deliverables. You’re not even pricing based on how many people are “on the account.”

You’re pricing the compressed time to value and the net outcome your applied IP creates for their business.

Yes, this is value based pricing but where you’re deploying your IP at scale (not licensing)

If you have strong intellectual property that has a proven track record, then this is the quadrant to push toward. You just have to ensure you can encode this into agents and focus on the net new value you create when you get out of the “doing”, because the ceiling on what you can charge here is directly tied to the value you create.

Not the time you spend or the team size or hours spent on site.

The value.

Quadrant 4: The Value Capture Play

Confession time:

Performance and outcome based pricing has always existed in consulting and agency services.

Revenue share, value capture, skin in the game. None of this is new.

What IS new is your ability to actually influence the outcomes.

The problem with performance deals in the old model was always control.

You’d take a revenue share arrangement, do everything right on your side, and then the client’s sales team would fumble the leads, or the founder would change strategy mid quarter, or the board would pivot the product.

You’d eat the downside on factors you couldn’t touch.

That’s why most smart operators avoided performance pricing. The math only worked when you had control over the variables. And you rarely did.

If you’re building off the Services Stack and creating agents to support and handle execution and follow my not so subtle cues to then leverage your agents to find net new value and go further up the value chain to get your client closer to “goal accomplished”…. then performance models are actually one of the most natural pricing models in the agentic era if you are selling top of the Services Stack.

When your agents are generating pipeline, producing content at scale, running research workflows, accelerating time to market… you have significantly more influence over the leading indicators that actually drive performance. You’re not just advising anymore. You’re able to be a producer.

Like I confessed earlier, performance structures aren’t new, you just have more power to control outcomes if you set your services right.

Here’s an example of a performance structure I recently helped a client craft:

• Base operational fee as your floor. This covers operations, the strategy layer, ongoing delivery. Think of this as the minimum the relationship costs to maintain (you can call it a retainer if you want but with items that will be out of scope. We are in the Post Scope Era)

• Performance payouts tied to metrics you directly influence.

  • Leading indicators paid monthly

  • Lagging indicators paid quarterly with a cap (esp if you are doing a % of revenue generated)

The cap is the same principle as Quadrant 2. The client should never hit a number where they resent paying you.

If the client feels like you’re extracting too much value from the relationship, even if you earned it, they’ll start looking for ways out.

The cap is a trust mechanism. Same philosophy as Quadrant 2: long term client relationships.

I’m not including equity splits in this quadrant.

Here’s why:

I’ve done equity deals in the past.

To be completely honest with you, it felt nice to have it but they didn’t pay off. Maybe one day they will but the reason Im sharing is that equity ties your compensation to factors you can’t always control.

Performance pricing in this new agentic era, if you focus on net new value and go further up the value chain, gives you the alignment of equity without the “illusion of control”.

You’re tied to outcomes you can directly influence and you get paid on a timeline that matches the value you’re creating.

Your Window of Action: Markets Take Time to Adapt (And That’s a Good Thing)

Now you might feel anxious to implement this immediately or that you’re behind the eight ball. Yes, the changes are happening are at exponential speeds, and yes, it is a lot to take in.

I’m writing this section to give you at least a breath.

Not for you to stall or for you to lallygag, but for you to catch your breath and strategically act.

Not every market is going to adopt AI at the same speed.

If you’ve read Crossing the Chasm, you know this pattern. Technology adoption doesn’t happen uniformly. There are innovators, early adopters, and then a massive gap before the early majority shows up. The majority waits until the technology has proven itself.

We’re in that gap right now for most of consulting and agency services.

The tech forward agencies are already building with agents, restructuring pricing, moving fast.

But clients?

Many of them are in industries that are years away from fully integrating AI into their own operations (I dont know the timelines but I do know this, there is a gap and we are in a unique time horizon right now)

And that’s fine.

That’s where you come in.

You deliver outcomes they couldn’t produce on their own timeline and deliver value using 1 of the 4 Value Quadrants.

So don’t let anyone tell you that you need to slash prices because AI makes everything cheaper. The clients who need you most right now aren’t even thinking about AI pricing.

They’re thinking about the 8 month project that you can deliver in 6 weeks.

Your services will be in demand, the way you deliver and price will shift and adapt, but your net value is still needed (and again to quote Jevons paradox, your services may be in even MORE demand).

BUT the window won’t be open forever. Markets DO catch up.

But right now, the gap between what’s possible with AI agents and what most businesses are actually doing is enormous.

So Who Do You Work With? Seek The Partner Trifecta

So which clients do you bet on?

Not every client fits the New Value Quadrant. Especially Quadrants 3 and 4 where you have real skin in the game. You’re making a bet when you hook into performance or price on value created. And like any bet, you need to vet the conditions before you put chips on the table.

From working with my own clients, to chatting with friends + colleagues, to discussing with veteran consultants and agency owners, I found 3 simple characteristics that come up time and time again and fit what I’m calling a partner trifecta AKA your ideal client.

Yes, all 3 need to be present.

1. Growing market: data meets conviction.

Yes, you need the data but you also have to believe in the market the client operates in. It’s part of the transformation and belief layer. Remember, you’re not selling services…

I’ll give you a real example. I recently was connected with a company in direct to consumer health diagnostics.

The founder didn’t need to convince me about the market, I was already a big believer and have high conviction in the growth potential of this market, and that excitement is apparently contagious.

But you also need data to know the market is growing and WILL be in demand for years (not just now).

A simple filter you can use is this:

Could you throw a rock in this industry and hit a company that’s growing?

If the answer is yes, you already know where Im going with this. If the answer is “depends on the company,” you’re already overthinking it.

Also, if you don’t have conviction about a specific market:

Don’t take the client. Running the New Value Quadrant on a client you don’t believe in will lead to instant burnout.

2. The industry is a tech laggard.

Counterintuitive but critical.

If the client’s industry is already deeply tech savvy, they’re going to build their own agent workflows. They won’t need you for long. They’ll internalize the capability, hire their own AI team, and you get commoditized.

But if the industry is slower to adopt?

They need you.

Remember, they’re not buying your agents. They’re not buying your services, they are buying the outcomes and performance. They need the result that you can provide, and by framing and positioning your outcomes in 1 of New Value Quadrants, you’ll be able to craft a delightful client experience although enjoy and want to keep working with you.

3. The founder gets it (or the person that hired you gets your value)

Non negotiable. You cannot change belief in a sales process nor should you.

When someone’s anchored in their belief, that’s their worldview and how they view themselves and others…

If the founder or the stakeholder you’re working with doesn’t understand and value what you’re doing, you won’t be able to operate at the transformation and belief layer of the Services Stack.

TLDR: You’ll spend half your time justifying your existence instead of creating value.

You’ll be treated as a commodity. And the performance conversation will turn adversarial the first time something doesn’t go exactly as planned.

They don’t need to be technical. They don’t need to understand how agents work.

But they need to see the vision you see in their business with your help and value the work you create.

In other words: they need to value the outcome, not the activity.

If that understanding isn’t there from the beginning, move on.

And when you find clients who sit at the intersection of all 3… growing market, tech laggard industry, founder who gets it… that’s where you go deep, add the most value, make the most profit and have the most fun.

Remember this window won’t last forever. Eventually industries catch up. But we’re in a moment right now where this convergence exists and the service providers who recognize it are going to build partnerships that outlast the window itself.

Be one of them.

The Value The Craft Model Opens Up For Every Party Involved

I wrote about the Craft Model in the Service Stack: a founder or principal holding the belief and transformation layers, with a small elite team of T shaped operators, and AI agents handling production underneath.

That model is the engine that makes the New Value Quadrant work.

When you’re running the Craft Model with agents underneath you, you can go deeper with clients than you ever could before.

In the past, you were limited by capacity. You had the skill set to solve deeper problems. You had the knowledge. You had the judgment. But you didn’t have the team or the bandwidth to get all the way down to where the real value is created inside the client’s business.

You’d top out at strategy. Maybe strategy plus high level consulting. But the execution, the measurement, the optimization, the day to day work that actually produces outcomes? That required a team you didn’t have or couldn’t afford to build.

Now you do.

Agents handle the production. Your team focuses on judgment, strategy, and the work that requires human conviction and pattern recognition. And you unlock capabilities that weren’t accessible before. Not because you lacked the knowledge.

Because you lacked the delivery capacity to act on it.

Think about what that means for the client relationship.

The same service provider who used to top out at strategy can now deliver the strategy AND the execution AND the measurement AND the optimization. All the way down to where the value is actually created inside the client’s business. You can sit in the trenches with them. You can be a true partner in their growth, not just an advisor who sends a deck and waits for the next quarterly review.

And that’s where performance based pricing finally makes sense. Because you’re not advising from the sidelines anymore. You’re producing the outcomes. You’re running the engine. You have real influence over the metrics that matter.

The agencies that run the Craft Model with the New Value Quadrant on top of it are going to be unrecognizable compared to what agencies look like today. Smaller teams, bigger impact, deeper client relationships, better margins.

That’s the future I’m building and helping clients build towards. And if that resonates with you, keep reading.

I Urge You, Please Stop Discounting Your Innovation

The team that drops fees because AI “does more work” is pricing the input, not the output.

That’s a race to the bottom. And the bottom is virtually zero. Because eventually the client will realize they can just run the agents themselves ¯\_(ツ)_/¯

AI is deflationary on inputs.

On value creation, it’s the opposite.

The question is which quadrant of the New Value Quadrant are you operating in and whether you have the conviction to price the value you’re creating instead of discounting the tool that helps you create it.

This is worth repeating:

Build with agents under you. Choose your quadrant deliberately. Find partners who meet the trifecta. And let your beliefs drive the bets you make. And have fun.

Literally, this is the most exciting times to be alive to find and create new solutions to help more clients go further.

If you want to discuss this more intimately 1on1 on how this affects your business, reach out. This is a subject I’m thinking deeply on nearly every day and working with clients on right now.

Do Good Work,

Raul

If this is your first time here:

Hi 👋🏼 I’m Raul, I help service founders redesign how they price, sell, and operate in the agentic AI era.

dogoodwork.io

When you’re ready to build the next version of your firm, let’s talk

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Frequently Asked Questions

Should I lower my consulting fees because AI makes my work faster?

No. The client hired you for results, not for the difficulty of the process. AI reduces your input cost. That is not a reason to compress your price. It is a reason to reinvest the freed capacity higher up the value chain and reprice around outcomes. If you pass the savings to the client, you are giving them a discount for your own innovation.

What is the New Value Quadrant?

The New Value Quadrant is a four-part framework for pricing consulting and agency services in the agentic era. The Margin Play keeps current pricing while AI cuts delivery cost. The Volume Play moves to usage-based consumption pricing. The IP Play packages your methodology as an agentic workflow and prices on compressed time-to-value. The Value Capture Play uses a baseline retainer plus performance bonuses tied to leading and lagging indicators. The goal is not to ascend from one to four. Pick the quadrant that fits your business and run it deliberately.

How do you price consulting or agency services based on outcomes instead of hours?

Stop anchoring to your time and anchor to the result the client is buying. Build a baseline operational fee that covers the relationship and ongoing delivery, then layer in performance bonuses tied to measurable indicators you can directly influence. AI agents give you enough control over those outcomes to justify sharing the upside. The practical shift is from billing for activity to pricing for transformation.

What types of clients should consultants and agency owners target in the AI era?

The Partner Trifecta describes the three filters that need to be true at once: a growing market, a tech-laggard industry, and a founder who values outcomes over activity. A growing market means your results compound. A tech-laggard industry means the client cannot replicate your AI capability in-house. A founder who values outcomes means the performance conversation stays collaborative instead of adversarial the first time something does not go perfectly.

What is the Craft Model and how does it connect to AI pricing?

The Craft Model structures a consulting or agency practice as a principal at the belief and transformation layers, a small elite team handling judgment-driven work, and AI agents running production underneath. It removes the delivery capacity ceiling without adding headcount. Once you run the Craft Model, the New Value Quadrant becomes practical: you have the scale to influence outcomes at the level performance pricing requires, and the depth to justify prices that have nothing to do with hours.