Strategy and value
“We're still paying for hours when what we need is outcomes.”
Rate cards and headcount pricing assumed that effort meant output. AI has broken that link.
The question leaders ask
Why are we still paying for hours when AI does more of the work?
01 / The challenge
You will recognize this if…
- Vendors bill the same hours while AI does more of the work.
- You cannot tell how much of what you pay for is AI-assisted, or how well.
- If you sell services, AI is eating into the billable hours you price on.
- Fixed-price work feels riskier because effort is harder to predict.
02 / Why it happens
The root cause.
Time-and-materials and per-head pricing assume output grows with effort. AI makes output per hour far more variable, so buyers overpay or providers undercharge, and nobody is rewarded for using AI well when it reduces the hours billed.
When AI multiplies what one engineer can produce, paying by the hour rewards the wrong thing. Buyers end up funding inefficiency, and good providers are penalized for working smarter.
We think the industry is moving to outcome-based and milestone-based models, backed by evidence both sides trust. The organizations that design those models first, on either side of the table, will set the terms for everyone else.
04 / How we solve it
What we do about it, with you.
A fixed-scope engagement with your commercial and delivery leads, ending in terms you can take into your next contract or renewal.
- 01
Define the unit of value
Agree what you are really buying: a feature, a release, a defect-free change, a modernized module.
- 02
Design outcome-based terms
Commercial models built on milestones and outcomes, with risk shared sensibly on both sides.
- 03
Put evidence both sides trust
Delivery and quality measures that make outcome-based pricing verifiable rather than a matter of opinion.
- 04
Reprice what you sell
For services firms: rework offerings, rate cards and margins for AI-assisted delivery before clients do it for you.
Paying for outcomes you can verify
Incentives that reward using AI well
Commercial terms that survive the next leap in tools
Does this sound like your team?
Tell us what you are seeing, and we will tell you honestly whether and how we can help.