Report Shows Agencies Pivoting to Outcome-Based Pricing
A new industry report finds agencies are moving away from billing by the hour as AI accelerates production, with outcome-based pricing emerging as the preferred model for aligning incentives with client results.
The rapid integration of AI is forcing a fundamental reckoning with the traditional agency pricing structure, according to a new analysis. The survey highlights that the standard practice of billing by the hour, the Time & Materials model, is becoming increasingly indefensible as AI accelerates production and obfuscates the true value of time spent.
The research indicates that the industry is in a period of intense experimentation, with “no clear pattern” yet emerging on how to charge for AI-enhanced services. The survey results on current pricing and profit models illustrate this flux:
31% report AI has little impact on pricing or profits.
29% are “still figuring out” the right model.
27% are successfully keeping or increasing prices, and AI is improving their margins.
This experimentation, however, points toward a clear trajectory: a pivot away from billing for time and toward pricing for impact and value.
The report identifies the Outcome-Based Model as the “Future Favorite.” This model aligns the agency’s incentives with the client’s business goals, eliminating the “speed discount” arguments that are endemic to T&M. By pricing a project based on the measurable business result it delivers, such as lead volume, revenue growth, or campaign performance, the time saved by AI directly translates into a higher margin for the agency without client friction.
Yonah C.L. van Andel, Owner and Managing Director of On a Daily Basis, articulated this shift, stating, “Everything is becoming much more efficient with AI, so it’s not really about time. It’s a value thing. Trying to reach your revenue targets through hours won’t be sustainable.”
While the outcome-based model is the aspirational choice, the report also assesses the status of other common structures:
Time & Materials (T&M): Under review and increasingly vulnerable. While transparent, the AI-powered efficiency boost means “hours worked” no longer reliably correlates with “value delivered,” leaving agencies open to price cut demands.
Fixed-Price Model: Considered “safe, for now.” It offers clients budget predictability, and AI can successfully boost margins as long as agencies do not overpromise timelines that compromise profitability.
Retainer Model: Identified as a “stability seeker.” It remains viable for strategic, ongoing partnerships where the value of strategy and continuous improvement outweighs the execution speed of production.
The overarching strategic takeaway is that the more agencies can link their price to a tangible result for the client, the less they will have to defend the use of AI. The technology shifts the value chain from production, which is increasingly commoditized, to strategy and insight, which remains the unique domain of human expertise. The successful agencies in 2025 are those actively working to decouple their revenue from the time clock, effectively monetizing their knowledge and the higher quality output AI facilitates, rather than the raw labor it replaces.