Great analysis as always Kyle! I'm curious about hybrid approaches - have you seen successful examples where companies started with a simpler model (like per agent) but incorporated outcome-based bonuses as training wheels before fully transitioning to the results-based model? This could address the attribution challenges while still moving toward the model you see winning long-term.
Thank you Kyle! Great to see some fresh thinking around how to price AI services.
In designing pricing and packaging, I try to factor in Explainability (how difficult is it, in practice, for a salesperson to explain the pricing model), "Estimateability" (how hard is it for a customer to determine the quantity they'll need to purchase),l and Traceability (how hard is it for a customer to determine how much they've consumed).
Do you have any thoughts around how each of these models performs in terms of ease of explanation, quantity estimation, and tracking consumption? (Perhaps a follow-up post...)
Great read and great visual framework. I am interested to know if anyone is applying this to advisory services / consulting? I am finding it challenging to move customers away from a traditional T&M price model as we utilize AI agent to deliver services more quickly, our risk to revenue decline increases. What pricing models/frameworks are trending for advisory services?
How have you seen these models getting sold to large organizations which generally require a cost estimate upfront (monthly or annually) given that the usage drives the overall costs?
the way i have seen this work is by selling buckets of X. X being outcomes or activities. and then agreeing on a price when the customer go over or the vendor eating the overage and revisiting the buckets every 6 months to a year
Great visual framework! I am interested to know if anyone is applying this to advisory services/consulting? I am finding it challenging to move customers away from a traditional T&M price model they've grown accustomed to and as we utilize AI agents to deliver services more quickly and efficiently, our risk to revenue decline increases. What pricing models/frameworks are trending for advisory services?
Great analysis as always Kyle! I'm curious about hybrid approaches - have you seen successful examples where companies started with a simpler model (like per agent) but incorporated outcome-based bonuses as training wheels before fully transitioning to the results-based model? This could address the attribution challenges while still moving toward the model you see winning long-term.
100% — there are a ton of hybrid models, some folks get very creative!
Comprehensive article backed by solid research. And a great read. Super helpful. Thank you!
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Another incredible research post by Kyle. I appreciate the breakdown and pros and cons of each.
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Incredibly helpful to my team and our business model. Huge thanks!
Glad to hear it!
This is similar to the Ibbaka Agent Pricing Layer Cake. In many cases these different layers will be combined and we will see hybrid pricing of agents. https://www.ibbaka.com/ibbaka-market-blog/pricing-in-the-agent-economy
Very nice 👌
great read!
Thank you Kyle! Great to see some fresh thinking around how to price AI services.
In designing pricing and packaging, I try to factor in Explainability (how difficult is it, in practice, for a salesperson to explain the pricing model), "Estimateability" (how hard is it for a customer to determine the quantity they'll need to purchase),l and Traceability (how hard is it for a customer to determine how much they've consumed).
Do you have any thoughts around how each of these models performs in terms of ease of explanation, quantity estimation, and tracking consumption? (Perhaps a follow-up post...)
Great read and great visual framework. I am interested to know if anyone is applying this to advisory services / consulting? I am finding it challenging to move customers away from a traditional T&M price model as we utilize AI agent to deliver services more quickly, our risk to revenue decline increases. What pricing models/frameworks are trending for advisory services?
Hi Kyle,
How have you seen these models getting sold to large organizations which generally require a cost estimate upfront (monthly or annually) given that the usage drives the overall costs?
the way i have seen this work is by selling buckets of X. X being outcomes or activities. and then agreeing on a price when the customer go over or the vendor eating the overage and revisiting the buckets every 6 months to a year
Thanks @manny for this insight.
Great visual framework! I am interested to know if anyone is applying this to advisory services/consulting? I am finding it challenging to move customers away from a traditional T&M price model they've grown accustomed to and as we utilize AI agents to deliver services more quickly and efficiently, our risk to revenue decline increases. What pricing models/frameworks are trending for advisory services?
Kyle your survey won't allow me to select a company being founded before 2018
There should be an option to select “Earlier”